The Government of India has officially clarified that no Goods and Services Tax (GST) will be imposed on UPI transactions exceeding ₹2,000, dispelling recent misinformation circulating on social media and news outlets. The Finance Ministry emphasized that there is currently no proposal or plan to levy GST on UPI payments, regardless of the transaction amount.
GST is applicable only on charges such as the Merchant Discount Rate (MDR), which merchants pay to banks or payment service providers for processing payments. However, since January 2020, the Central Board of Direct Taxes (CBDT) has eliminated MDR on person-to-merchant (P2M) UPI transactions, effectively removing any GST liability on these payments. As a result, UPI transactions remain free from GST charges.
The government continues to promote digital payments as part of its vision for a cashless economy. To encourage adoption, it launched an incentive scheme in FY 2021-22 to offset transaction costs for low-value UPI payments, which has seen payouts increase from ₹1,389 crore in FY 2021-22 to ₹3,631 crore in FY 2023-24.
UPI usage has surged dramatically, with transaction volumes rising from ₹21.3 lakh crore in FY 2019-20 to over ₹260 lakh crore by March 2025. Merchant payments alone accounted for ₹59.3 lakh crore, underscoring the growing trust and acceptance of UPI as a payment mode. India leads globally, handling 49% of real-time digital transactions in 2023.
This official clarification reassures consumers and merchants that UPI transactions, including those above ₹2,000, will continue to be exempt from GST, supporting the government’s ongoing efforts to foster a robust digital payments ecosystem.