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GST on UPI Payments: In today's digital era, UPI (Unified Payments Interface) has become an important part of our lives. One reason for this is that UPI transactions are free. But suppose if 18 percent GST starts being levied on transactions through it, then what will you do in such a situation? Will you continue to use UPI for everyday payments or will you start using cash again?

Looking at the way the government is promoting the digital economy and the use of UPI in our country, it does not seem so. In March, transactions worth 24.77 lakh crores were done through UPI in India, which is its highest record so far.

GST on UPI transactions of more than Rs 2,000?

Many reports say that GST can be imposed on UPI payments or transactions of more than Rs 2,000, due to which GST on UPI is a topic of discussion at this time. These reports have scared all UPI user segments, from individual users to small business owners.

The government gave this clarification.

In such a situation, is the government going to impose GST on UPI transactions of more than Rs 2000? On this, the government has clarified that it is not going to do anything like this, this claim is completely wrong. The Finance Ministry has described such reports as "completely false, misleading and baseless" and said that no such proposal is currently under consideration.

GST is levied only on certain charges, such as the Merchant Discount Rate (MDR), which applies to certain payment instruments. However, effective from January 2020, the Central Board of Direct Taxes (CBDT) has removed MDR on Person-to-Merchant (P2M) UPI transactions as per the notification dated 30 December 2019. Since there is no MDR on UPI transactions, GST is not applicable on them.

The government has introduced an incentive scheme from FY 2022 to promote digital payments through UPI, especially for low-value P2M UPI transactions. It aims to benefit small merchants by reducing transaction costs and encouraging wider participation in digital payments.

UPI transaction value to rise to Rs 260.56 lakh crore by March 2025

The value of UPI transactions has increased from Rs 21.3 lakh crore in FY 2020 to Rs 260.56 lakh crore by March 2025. Of this, P2M transactions alone have reached Rs 59.3 lakh crore.