False GST Rumours Dismissed by Government
No GST on UPI Transactions Above ₹2,000: Finance Ministry Clears the Air: In a strong rebuttal to circulating misinformation, the Indian Finance Ministry has clarified that there is no GST on UPI transactions exceeding ₹2,000. The official statement came after several media outlets falsely reported plans to tax high-value Unified Payments Interface (UPI) transactions. The Ministry stated clearly that such claims are “completely baseless and misleading.” This clarification reinforces India’s digital push and the government’s commitment to a cashless, inclusive economy.
Why No GST Applies on UPI Payments
The central point in this matter lies in the absence of Merchant Discount Rate (MDR) for Person-to-Merchant (P2M) UPI transactions. Since January 2020, MDR has been eliminated for such payments. And as per GST law, the tax is applicable only if there’s a fee or service charge. So, with no MDR, there’s no GST either. This policy encourages merchants, especially smaller ones, to accept digital payments without added burden.
India’s UPI Growth Is Unstoppable
The Finance Ministry highlighted the meteoric rise of UPI in India. In FY 2019–20, UPI transactions stood at ₹21.3 lakh crore, but by March 2025, that number has surged to ₹260.56 lakh crore. This dramatic growth shows how deeply digital payments have penetrated both urban and rural India, making the country a global leader in real-time payment systems.
Government’s UPI Incentive Scheme
To further encourage digital adoption, especially among small merchants, the government launched the UPI Incentive Scheme in FY 2021–22. This program rewards businesses for accepting low-value P2M transactions without charging MDR. The payout data reflects the scheme’s impact: ₹2,210 crore was disbursed in FY 2022–23, and ₹3,631 crore followed in FY 2023–24. This targeted support fosters grassroots-level digital innovation.
Promoting Financial Inclusion Through Tech
By waiving MDR and maintaining a no-GST policy on UPI, the government is backing small shopkeepers, roadside vendors, and rural kirana stores. These are often the first points of contact for many citizens in India’s vast financial ecosystem. Digital inclusion isn’t just about apps and QR codes—it’s about empowering the underbanked with easy, cost-free access to formal financial systems.
STATIC GK SNAPSHOT
No GST on UPI Transactions Above ₹2,000: Finance Ministry Clears the Air:
| Topic | Details |
| Clarified By | Ministry of Finance, Government of India |
| GST on UPI (>₹2,000) | No GST Applicable |
| MDR on P2M UPI | Removed since January 2020 |
| GST Rule | Applicable only if there’s a charge like MDR |
| UPI Value FY20 | ₹21.3 lakh crore |
| UPI Value FY25 (Mar) | ₹260.56 lakh crore |
| Incentive Scheme Launch | FY 2021–22 |
| FY23 Incentive Payout | ₹2,210 crore |
| FY24 Incentive Payout | ₹3,631 crore |
| Focus | Promote digital payments and financial inclusion |
