Amid circulating claims on social media, the Centre has firmly denied reports that it is planning to impose GST on UPI transactions over Rs 2,000. The Ministry has clarified that such claims are completely false, misleading, and baseless.

There is currently a lot of discussion surrounding the imposition of GST on UPI transactions exceeding Rs 2,000. This news has captured the attention of various UPI user groups, including individual users and small business owners, causing significant speculation within the community. 

Following the buzz on social media, the Central Board of Indirect Taxes & Customs took to the social media platform X explaining the government’s stand on charging GST on digital payments. It said UPI has revolutionised the way people in rural communities can make payments and receive funds, eliminating the need for physical cash.

“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. GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments. 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,” the post read.

Here’s what you need to know:

No GST on UPI: There is no proposal under consideration to levy GST on UPI payments.

No MDR = No GST: Since Merchant Discount Rate (MDR) was removed for Person-to-Merchant (P2M) UPI payments in January 2020, GST is not applicable on such transactions.

The CBDT notification dated 30th December 2019 officially abolished MDR for P2M UPI payments.

Government Is Promoting, Not Taxing UPI.

Source: Business Today