GUWAHATI: The central government has clarified that it is not considering any proposal to levy Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding ₹2,000.
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The statement was issued on Friday, April 18, amid circulating claims suggesting the imposition of such a tax, which the government termed as false and misleading.
As per the finance ministry, GST is applied only on specific charges such as the Merchant Discount Rate (MDR), applicable to certain payment instruments. However, the Central Board of Direct Taxes (CBDT) had already abolished the MDR on Person-to-Merchant (P2M) UPI transactions, effective from December 30, 2019.
Since no MDR is currently levied on UPI transactions, no GST is applicable on such transactions. The government reiterated its commitment to the promotion of digital payments via UPI, further denying any move to introduce taxes on these digital transactions.
To enhance the UPI ecosystem, an Incentive Scheme has also been operational since the financial year 2021-22. This scheme specifically targets low-value P2M transactions and seeks to reduce transaction costs for small merchants. It also aims to encourage broader participation and innovation within the digital payments space.