In a significant clarification that puts to rest widespread speculation, the Ministry of Finance has officially confirmed that the Government of India is not considering the imposition of Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding ₹2,000. The clarification was released on April 18, 2025, via the Press Information Bureau (PIB), stating that such claims are “completely false, misleading, and without any basis.”
The Ministry emphasized that GST is levied on certain charges, like the Merchant Discount Rate (MDR), applicable to payments made through specific instruments. However, since January 2020, the Central Board of Direct Taxes (CBDT) has abolished MDR on Person-to-Merchant (P2M) UPI transactions, as per a Gazette Notification issued on December 30, 2019. Consequently, as there is no MDR levied on these transactions, GST does not apply either.
The government remains firm in its commitment to promote digital transactions through UPI and has backed this intent with a dedicated Incentive Scheme that started in the financial year 2021-22. This initiative particularly focuses on low-value UPI P2M transactions, aiming to ease transaction costs for small merchants while driving digital payment adoption across the country. The scheme’s allocations clearly reflect the government’s ongoing support:
For FY 2021-22, ₹1,389 crore was allocated.
For FY 2022-23, the allocation rose to ₹2,210 crore.
For FY 2023-24, the government allocated ₹3,631 crore.
These measures have played a pivotal role in strengthening India's digital payment infrastructure, allowing businesses and consumers to seamlessly transition toward cashless transactions. This commitment has also earned India global recognition. According to the ACI Worldwide Report 2024, India accounted for a remarkable 49% of global real-time payment transactions in 2023 — solidifying its reputation as a leader in digital payment innovation.
Backing this global position, the actual numbers tell an impressive story. UPI transaction values have witnessed exponential growth over the years — rising from ₹21.3 lakh crore in FY 2019-20 to a staggering ₹260.56 lakh crore by the end of March 2025. Out of this, Person-to-Merchant (P2M) transactions alone reached ₹59.3 lakh crore, showcasing not only the increasing acceptance of digital payments by merchants but also the growing trust of Indian consumers in this payment method.
Disclaimer:
The above article is based on official information released by the Ministry of Finance, Government of India, through the Press Information Bureau (PIB) on April 18, 2025. All data and financial figures mentioned are sourced directly from the official statement. Readers are advised to rely on verified government releases for accurate information, as rumors and unverified claims on social media may lead to confusion. This article is intended for informational purposes and does not constitute financial advice or policy endorsement.
