In response to widespread speculation on social media, the Central Government has officially clarified that there is no plan to impose GST on UPI transactions exceeding ₹2,000. The Ministry has labelled such reports as entirely false, misleading, and devoid of any factual basis. These rumors, although baseless, caused concern among digital payment users, especially individuals and small business owners who rely heavily on UPI for seamless transactions.
The Central Board of Indirect Taxes and Customs (CBIC) addressed these concerns through a post on the social media platform X (formerly Twitter), stating that the government has no intention of taxing UPI transactions. Instead, it emphasized that UPI has revolutionized digital payments, particularly in rural areas, where it has made fund transfers and payments more accessible without the need for physical cash.
One of the key points clarified by the CBIC is that GST is not applicable to UPI payments because there is no Merchant Discount Rate (MDR) currently charged on Person-to-Merchant (P2M) transactions. MDR is the fee levied by banks on merchants for processing digital payments, and GST is applicable only on such charges. However, since MDR was officially abolished for P2M UPI payments via a Gazette Notification dated 30th December 2019, there is no taxable component involved — and hence, no GST.
Far from taxing UPI, the government has been actively promoting it. Since the financial year 2021–22, the Centre has been implementing a UPI Incentive Scheme aimed at covering the costs of digital transactions borne by payment service providers. The incentive amounts have been increasing each year, reflecting the government’s commitment to fostering a cashless economy. ₹1,389 crore was allocated in FY 2021–22, ₹2,210 crore in FY 2022–23, and ₹3,631 crore in FY 2023–24 — all aimed at encouraging merchants to adopt digital payments and supporting the backend infrastructure that powers UPI.
India’s UPI platform has firmly established itself as a global leader in real-time digital payments. According to the National Payments Corporation of India (NPCI), UPI transactions in March 2025 reached an all-time high of ₹24.77 lakh crore — a 12.7% increase over February 2025 and a 25% jump from March 2024. In volume terms, this represents a 36% year-on-year growth. These numbers underscore the growing trust and reliance of users on digital payments, not just for person-to-person transfers but also for retail and merchant transactions.
The ACI Worldwide Report 2024 further highlighted India’s dominance in the digital payments space, revealing that the country accounted for 49% of all global real-time transactions in 2023. This unparalleled achievement is a testament to India’s robust fintech infrastructure, driven by the adoption of UPI across various sectors.
In conclusion, there is no GST on UPI transactions, and there is no plan in motion to introduce one. The government continues to promote and subsidize digital payments, not penalize them. With its rapid growth, increasing adoption, and strong policy support, UPI is not only transforming the Indian economy but also setting global benchmarks in digital finance.
