Finance Ministry: claims of GST on UPI transactions above ₹2,000 are false
The Finance Ministry said on 18 April 2025 that claims of the Government considering GST on UPI transactions above ₹2,000 are false, as no MDR is charged on UPI and hence no GST applies.
Summary
The Ministry of Finance said on 18 April 2025 that claims that the Government is considering levying GST on UPI transactions over ₹2,000 are false and that there is no such proposal. GST is levied on charges such as the Merchant Discount Rate (MDR); since MDR on person-to-merchant (P2M) UPI transactions was removed from January 2020 through a CBDT notification of 30 December 2019, no GST applies. An incentive scheme for low-value P2M UPI transactions has run since 2021-22, with allocations of ₹1,389 crore, ₹2,210 crore and ₹3,631 crore in FY22–FY24. UPI transaction value grew from ₹21.3 lakh crore in 2019-20 to ₹260.56 lakh crore by March 2025, and India accounted for 49% of global real-time transactions in 2023 (ACI Worldwide Report 2024).
Key facts
- Clarification
- No proposal for GST on UPI above ₹2,000
- Why
- GST applies to charges like MDR; no MDR on P2M UPI since Jan 2020
- Incentive scheme
- Since FY 2021-22: ₹1,389 cr, ₹2,210 cr, ₹3,631 cr
- UPI value
- ₹21.3 lakh cr (FY20) → ₹260.56 lakh cr (by Mar 2025)
- Global share
- 49% of real-time transactions in 2023 (ACI Worldwide 2024)
Practice MCQs 3 questions
Consider the following, as stated by the Finance Ministry on 18 April 2025: 1. GST is levied on charges such as the Merchant Discount Rate (MDR) relating to payments. 2. MDR on person-to-merchant (P2M) UPI transactions was removed with effect from January 2020. Which of the statements given above is/are correct?
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Correct answer: C — Both 1 and 2
Both are correct; since no MDR is charged on UPI, no GST applies.
According to the ACI Worldwide Report 2024 cited by the Finance Ministry, what share of global real-time transactions did India account for in 2023?
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Correct answer: C — 49%
49%, as cited in the Finance Ministry release.
What was the value of UPI transactions by March 2025, as stated by the Finance Ministry?
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Correct answer: B — ₹260.56 lakh crore
₹260.56 lakh crore by March 2025, up from ₹21.3 lakh crore in 2019-20; ₹3,631 crore was the FY24 incentive allocation.