No GST on UPI Payments Over ₹2,000, Says Government

New Delhi, April 18, 2025: The government has cleared the air on recent rumors about a possible GST charge on UPI payments above ₹2,000 – and the answer is a firm no.

In an official statement released Friday, the Finance Ministry called such reports false and baseless, stating clearly that there’s no proposal to tax UPI transactions in this way.

“There is no such plan under consideration,” the Ministry said, putting an end to the confusion.

To break it down: GST is only applicable on specific fees like the Merchant Discount Rate (MDR) – the charge that merchants sometimes pay on digital transactions. But since January 2020, even that MDR was removed for person-to-merchant (P2M) UPI payments, meaning no fee, and therefore no GST.

No fee → No GST. Simple as that.

The Ministry also emphasized how UPI usage has exploded in the last few years. In 2019-20, UPI payments totaled ₹21.3 lakh crore. Fast forward to 2025, and that number has jumped to a whopping ₹260.56 lakh crore.

To help UPI grow, especially among small merchants, the government has been running a special incentive scheme since 2021-22. This scheme covers the costs of processing small-value transactions to encourage adoption.

Here’s how much the government has spent to support it:

• ₹2,210 crore in FY 2022-23
• ₹3,631 crore in FY 2023-24

The Ministry noted that these payouts show the government’s long-term commitment to boosting digital payments and making UPI a go-to option for everyone, from big businesses to local kirana stores.

So, for now, you can continue making UPI payments – big or small – with zero worries about GST.