The Ministry of Finance on Friday refuted social media speculation that Goods and Services Tax (GST) would be imposed on Unified Payments Interface (UPI) transactions exceeding ₹2,000. Terming such reports “completely false, misleading, and without any basis”, the Ministry clarified that no such proposal is currently under consideration.
The Ministry issued an official statement to address the growing misinformation surrounding GST and UPI payments. It reaffirmed that “GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments.”
The clarification highlighted that effective from January 2020, the Central Board of Direct Taxes (CBDT), through a Gazette Notification dated 30 December 2019, had eliminated MDR charges on Person-to-Merchant (P2M) UPI transactions. As no MDR is charged on UPI payments at present, no GST is applicable.
“The government remains committed to promoting digital payments via UPI,” the Ministry said. To bolster this commitment, an Incentive Scheme has been in operation since 2021–22, designed specifically to support low-value UPI (P2M) transactions and reduce transactional burdens on small merchants.
The scheme has progressively expanded, with incentives disbursed as follows: ₹1,389 crore in FY 2021–22, ₹2,210 crore in FY 2022–23, and ₹3,631 crore in FY 2023–24. “These measures have significantly contributed to India’s robust digital payments ecosystem,” the statement added.
According to the ACI Worldwide Report 2024, India accounted for a staggering 49 per cent of global real-time transactions in 2023, underscoring its position as the world’s most advanced real-time payments market.
Transaction volumes have soared in recent years. Data from the National Payments Corporation of India (NPCI) reveals that UPI transactions peaked at ₹24.77 lakh crore in March 2025—an increase of 12.7 per cent from February’s ₹21.96 lakh crore. This marks a 25 per cent rise in value and a 36 per cent surge in volume compared to March 2024.
Overall, the value of UPI payments has increased more than twelvefold over the past five years—from ₹21.3 lakh crore in FY 2019–20 to ₹260.56 lakh crore by FY 2024–25. Of this, P2M transactions alone accounted for ₹59.3 lakh crore, reflecting greater adoption among merchants and growing consumer trust in digital payments.
India’s UPI has thus emerged not only as a national success story, but also as a global benchmark in real-time financial transactions.
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