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For the past few days, some posts were becoming increasingly viral on social media in which it was being claimed that now tax will be levied on payments of more than Rs 2000 through UPI. When this matter reached the Finance Ministry, the government cleared the confusion of the people on this matter. If you too were in this tension for so many days that now tax will be levied on UPI payments, then let us tell you what is the whole matter.

Will tax be levied on UPI payments?

The government clarified that it is not considering imposing GST on UPI transactions of more than Rs 2,000. Clarifying the news of the government considering imposing Goods and Services Tax (GST) on UPI transactions of more than Rs 2,000, the Finance Ministry said that these are completely wrong, misleading, and baseless. The ministry said in a statement, "At present, there is no such proposal before the government." GST is levied on certain charges like the Merchant Discount Rate (MDR).

The Finance Ministry has given this clarification after reports that the government is considering imposing tax on UPI. The ministry said that these reports are false and the government is committed to promoting digital payments through UPI. At present, no such proposal is before the government.

MDR also removed
The Central Board of Direct Taxes (CBDT) has removed MDR on UPI transactions between customers to merchants (P2M) from January 2020. The ministry said, "Since no MDR is levied on UPI transactions at this time, there is no GST applicable on these transactions." UPI transactions have seen rapid growth, growing from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025. The ministry also said that the government is committed to promoting digital payments through UPI.

How many people use UPI?
UPI transactions are growing rapidly, which is why India's UPI is now being used for payments in many countries of the world. In FY 2019-20, it was Rs 21.3 lakh crore, which increased to Rs 260.56 lakh crore by March 2025. People now prefer to make payments through UPI instead of cash.

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