- Clarification on GST for UPI Transactions: The Ministry of Finance has dismissed rumors that the government plans to impose Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding ₹2,000, stating that such claims are baseless. Currently, GST is applicable only to payment-related charges like the Merchant Discount Rate (MDR), which has been waived for person-to-merchant (P2M) UPI transactions since January 2020.
- Support for UPI Growth: To foster the growth of UPI-based digital payments, the government has implemented an Incentive Scheme since FY 2021–22, aimed at offsetting transaction costs for small merchants and boosting the adoption of low-value P2M transactions. The allocation for this scheme has increased significantly, from ₹1,389 crore in FY 2021–22 to ₹3,631 crore in FY 2023–24.
- Impact on Digital Transactions: These efforts have contributed to a substantial rise in India’s digital transaction volumes, with UPI transaction values soaring from ₹21.3 lakh crore in FY 2019–20 to ₹260.56 lakh crore by March 2025. As of 2023, India accounted for 49% of global real-time transactions, indicating a strong and growing digital payments ecosystem.
Souce Taxguru
