Is Govt going to levy transaction charges on UPI?

The claims that the Government is considering levying GST on UPI transactions over ₹2,000 are completely false, misleading, and without any basis. 

👉Currently, there is no such proposal before the government.

👉GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments. 

👉Effective January 2020, the CBDT has removed the MDR on Person-to-Merchant (P2M) UPI transactions through the Gazette Notification dated 30th December 2019.

👉Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions.

 

👉The Government remains committed to promoting digital payments via UPI. 

👉To support and sustain the growth of UPI, an Incentive Scheme has been operational from FY 2021-22. This scheme specifically targets low-value UPI (P2M) transactions, benefiting small merchants by alleviating transaction costs and promoting wider participation and innovation in digital payments.

👉The total incentive payouts under this scheme over the years reflect the Government's sustained commitment to promoting UPI-based digital payments. Allocation under the scheme over the years has been: 

• FY2021-22: ₹1,389 crore

• FY2022-23: ₹2,210 crore

• FY2023-24: ₹3,631 crore.

👉These measures have significantly contributed to India's robust digital payments ecosystem. 

👉According to the ACI Worldwide Report 2024, India accounted for 49% of global real-time transactions in 2023, reaffirming its position as a global leader in digital payments innovation. 

👉UPI transaction values have seen an exponential increase, growing from ₹21.3 lakh crore in FY 2019-20 to ₹260.56 lakh crore by March 2025. Specifically, P2M transactions have reached ₹59.3 lakh crore, reflecting growing merchant adoption and consumer confidence in digital payment methods