No GST on UPI Transactions Above ₹2,000, Finance Ministry Clarifies

Amid rising concerns and viral reports on social media, the Finance Ministry has firmly denied the rumors that UPI (Unified Payments Interface) transactions above ₹2,000 would be subject to GST. In an official statement, the ministry dismissed such claims as baseless, misleading, and false, reaffirming that there is no such proposal under consideration.

This clarification offers much-needed relief to both digital payment users and merchants, many of whom were worried about additional charges on higher-value transactions.

No GST or MDR on P2M UPI Payments

According to the ministry, Person-to-Merchant (P2M) UPI transactions are exempt from both GST and MDR (Merchant Discount Rate). While GST may apply to some service charges on other digital payment methods, UPI transactions remain entirely free of such levies when payments are made from customers to merchants.

This tax exemption has been in place since January 2020, following the Central Board of Direct Taxes (CBDT) gazette notification issued on December 30, 2019.

Government's Focus: Encouraging Digital Payments

Reiterating its commitment to promote a cashless economy, the government highlighted the success of the UPI Incentive Scheme, which began in FY 2021–22. This initiative provides financial incentives to encourage low-value P2M UPI payments, especially benefiting small and micro merchants.

With zero-cost digital transactions, merchants can now easily accept payments without worrying about transaction charges. This move not only simplifies business operations but also furthers the adoption of digital payments across the country.

India Leads the World in Digital Transactions

India's leadership in digital payments is backed by data. According to the ACI Worldwide 2024 Report, 49% of the world’s real-time transactions in 2023 were conducted in India. This highlights the nation’s unmatched progress in fintech adoption and real-time payment infrastructure.

In terms of volume, UPI has seen explosive growth:

• In FY 2019–20, total UPI transactions were worth ₹21.3 lakh crore.

• By March 2025, this number surged to a whopping ₹260.56 lakh crore, underscoring the growing trust in digital payment systems.

Bottom Line

There is no GST applicable on UPI payments over ₹2,000, and there is no plan to introduce such a charge, as confirmed by the Finance Ministry. This decision ensures continued ease, cost-effectiveness, and expansion of digital payments — particularly for merchants and small businesses — as India strengthens its position as a global leader in real-time payments.