Amid rising chatter on social media, the Central Government has categorically refuted claims suggesting a proposal to levy Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding ₹2,000. The Ministry of Finance, via the Central Board of Indirect Taxes & Customs (CBIC), has labelled these claims as “false, misleading, and without any basis.”
Social media platforms have recently seen a flurry of posts alleging that the government plans to tax digital transactions above a certain threshold. These claims sparked concern among users, particularly individuals and small business owners who rely heavily on UPI for day-to-day transactions. Responding swiftly, the CBIC issued a clarification on X (formerly Twitter), stressing that no such proposal is under consideration.
“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,” the official statement read.
It further explained that GST is only applicable on certain charges such as the Merchant Discount Rate (MDR), and since MDR on Person-to-Merchant (P2M) UPI payments was abolished in January 2020, there is no GST applicable on these transactions. This move was formalised via a Gazette Notification dated December 30, 2019.
Key Clarifications from the Government:
- No GST on UPI: There is no proposal to impose GST on UPI transactions.
- No MDR = No GST: MDR on P2M UPI payments was removed in January 2020, hence no GST applies.
- Incentives, Not Taxes: The government is actively promoting UPI usage through financial incentives, not taxes.
UPI Incentive Scheme Highlights:
To foster adoption and reduce transaction costs for merchants, the government has allocated significant funds under its UPI Incentive Scheme:
- FY 2021-22: ₹1,389 crore
- FY 2022-23: ₹2,210 crore
- FY 2023-24: ₹3,631 crore
These incentives underscore the government’s commitment to expanding digital payments, particularly for low-value transactions.
UPI: A Global Digital Payments Leader
India’s UPI has rapidly transformed into one of the most efficient and widely used real-time digital payment systems globally. As per data from the National Payments Corporation of India (NPCI), UPI transactions in March 2025 reached an all-time high of ₹24.77 lakh crore — a 12.7% increase from February’s ₹21.96 lakh crore. Year-on-year, this marks a 25% rise in transaction value and a 36% jump in transaction volume.
A 2024 report by ACI Worldwide also revealed that India accounted for 49% of all global real-time transactions in 2023, cementing its position as a frontrunner in digital payments.
Between FY 2019-20 and FY 2024-25, UPI transactions grew from ₹21.3 lakh crore to ₹260.56 lakh crore. Notably, Person-to-Merchant payments rose to ₹59.3 lakh crore — a testament to the growing trust and reliance on cashless methods by both consumers and small businesses.
Bottom Line
Despite misleading online claims, the government remains firmly committed to fostering a cashless economy through UPI, with no intention of burdening users with GST on digital payments. Instead, policy efforts continue to support and incentivize digital transaction infrastructure across the country.