Assertions that the government is considering imposing goods and services tax (GST) on high-value UPI transactions above Rs 2,000 have been denied, stating that the assertions are “wholly untrue, deceptive, and without any basis.”
On Friday, the Central Board of Indirect Taxes & Customs (CBIC) declared that the government has not received any such proposal. Additionally, it said that GST is applied to fees associated with payments made with specific instruments, including the Merchant Discount Rate (MDR).
In a long post on X, CBIC said, “The claims that the Government is considering levying GST on UPI transactions over ₹2,000 are completely false, misleading, and without any basis. 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”
According to a number of media sources, digital payments exceeding the Rs 2000 threshold may be subject to the usual 18% GST rate for the majority of digital services.
A Rs 1,500-crore incentive plan was approved by the Union Cabinet, led by Prime Minister Narendra Modi, last month to encourage small merchants to engage in low-value BHIM-UPI P2M transactions. According to this plan, small merchants will be eligible for 0% cost or MDR and a 0.15% reward on all person-to-merchant (P2M) transactions up to Rs 2,000.
The program will run from April 1, 2024, to March 31, 2025, for a period of one year. The second-highest mop-up in history was in March 2025, when gross GST collection increased 9.9% to over Rs 1.96 lakh crore. While revenue from imported items increased 13.56 percent to Rs 46,919 crore, GST revenue from local transactions increased 8.8% to Rs 1.49 lakh crore.
