Centre Denies Claims of GST on UPI Transactions Above ₹2,000, Calls Rumours Baseless

Amid a surge of misinformation on social media, the Central Government has firmly dismissed claims suggesting the imposition of Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding ₹2,000. In an official statement, the Ministry of Finance called such reports "false, misleading, and completely baseless."

The rumors had sparked confusion among individual UPI users and small businesses, prompting concerns about potential charges on digital transactions. Social media was abuzz with claims that the government was considering a new tax policy for higher-value UPI transfers.

To address these concerns, the Central Board of Indirect Taxes & Customs (CBIC) issued a clarification via the platform X (formerly Twitter), asserting that no such proposal is under discussion.

The CBIC explained that GST is only applicable to specific charges such as the Merchant Discount Rate (MDR) on certain payment methods. However, effective from January 2020, the MDR on Person-to-Merchant (P2M) UPI transactions was abolished through a Gazette Notification issued on December 30, 2019.

As a result, since no MDR is levied on these transactions, no GST is applicable either. This policy remains unchanged as of now.

 "The claims that the Government is considering levying GST on UPI transactions over ₹2,000 are completely false. There is currently no such proposal before the government," said CBIC in its post.

Rather than taxing UPI, the Indian government has been actively supporting and incentivizing digital transactions to promote financial inclusion, especially among small businesses and rural users. Under the UPI Incentive Scheme, significant funds have been allocated to cover transaction costs:

• FY 2021-22: ₹1,389 crore
• FY 2022-23: ₹2,210 crore
• FY 2023-24: ₹3,631 crore

These incentives are aimed at encouraging wider adoption of cashless payments and boosting innovation in the digital payment ecosystem.

India's UPI system continues to set global benchmarks in real-time digital payments. According to the National Payments Corporation of India (NPCI), UPI transactions in March 2025 reached a record ₹24.77 lakh crore, a 12.7% increase from ₹21.96 lakh crore in February. Compared to March 2024, the value of transactions rose by an impressive 25%, while the transaction volume surged by 36%.

Furthermore, the ACI Worldwide Report 2024 revealed that India accounted for 49% of all global real-time payments in 2023, making it the world’s most advanced real-time payment ecosystem.

Over the years, UPI has seen phenomenal growth—from ₹21.3 lakh crore in FY 2019-20 to ₹260.56 lakh crore in FY 2024-25. Notably, P2M payments alone contributed ₹59.3 lakh crore, reflecting strong adoption by small businesses, vendors, and the general public.