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On Friday, the finance ministry stated it is not planning to impose GST on UPI transactions over ₹2,000, calling such rumors “entirely false and misleading.”
The ministry confirmed, “There is no proposal of this nature under government consideration.” It clarified that GST applies to fees like the Merchant Discount Rate (MDR) for certain payment methods, but since January 2020, the Central Board of Direct Taxes (CBDT) has removed the MDR for person-to-merchant (P2M) UPI transactions.
MDR is the fee merchants pay when banks or payment processors handle a transaction. UPI transaction volumes have skyrocketed, from ₹21.3 lakh crore in FY 2019-20 to an expected ₹260.56 lakh crore by March 2025.
The Ministry reaffirmed its commitment to promoting digital payments via UPI. To support UPI’s growth, an incentive program has been active since FY2021-22, targeting low-value P2M UPI transactions to help small merchants by lowering transaction costs and fostering innovation in digital payments.
For the fiscal year 2023-24, the government has allocated ₹3,631 crore for this initiative, up from ₹2,210 crore in 2022-23. The Ministry noted that cumulative incentive disbursements over the years reflect the government’s dedication to enhancing UPI-based digital payments.
(Newsroom staff only edited this story for style from a syndicated feed)
