The Center has categorically refuted rumors that it intends to apply GST to UPI transactions over Rs 2,000, despite the claims being shared on social media. The Ministry has made it clear that these kinds of statements are wholly untrue, deceptive, and unfounded.
The application of GST to UPI transactions over Rs 2,000 is a topic of much debate at the moment. Numerous UPI user groups, including individual users and small company owners, have taken notice of this news, which has led to a great deal of conjecture in the community.
The Central Board of Indirect Taxes & Customs used the social media platform X to explain the government's position on imposing GST on digital payments after social media generated a lot of buzz. It claimed that by doing away with the requirement for actual cash, UPI has completely changed how people in rural areas may send and receive money.
"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 post read.
Here's what you need to know:
No GST on UPI: There is no proposal under consideration to levy GST on UPI payments.
No MDR = No GST: Since Merchant Discount Rate (MDR) was removed for Person-to-Merchant (P2M) UPI payments in january 2020, GST is not applicable on such transactions.
The CBDT notification dated 30th december 2019 officially abolished MDR for P2M UPI payments.
Government Is Promoting, Not Taxing UPI
Contrary to the false claims, the government has been actively incentivising digital payments, especially low-value UPI transactions. To support this, a UPI Incentive Scheme has been in place since FY 2021-22:
FY 2021-22: Rs 1,389 crore
FY 2022-23: Rs 2,210 crore
FY 2023-24: Rs 3,631 crore
The application of GST to UPI transactions over Rs 2,000 is a topic of much debate at the moment. Numerous UPI user groups, including individual users and small company owners, have taken notice of this news, which has led to a great deal of conjecture in the community.
The Central Board of Indirect Taxes & Customs used the social media platform X to explain the government's position on imposing GST on digital payments after social media generated a lot of buzz. It claimed that by doing away with the requirement for actual cash, UPI has completely changed how people in rural areas may send and receive money.
"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 post read.
Here's what you need to know:
No GST on UPI: There is no proposal under consideration to levy GST on UPI payments.
No MDR = No GST: Since Merchant Discount Rate (MDR) was removed for Person-to-Merchant (P2M) UPI payments in january 2020, GST is not applicable on such transactions.
The CBDT notification dated 30th december 2019 officially abolished MDR for P2M UPI payments.
Government Is Promoting, Not Taxing UPI
Contrary to the false claims, the government has been actively incentivising digital payments, especially low-value UPI transactions. To support this, a UPI Incentive Scheme has been in place since FY 2021-22:
FY 2021-22: Rs 1,389 crore
FY 2022-23: Rs 2,210 crore
FY 2023-24: Rs 3,631 crore
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