The Finance Ministry clarified that there is no plan to impose 18% GST on UPI transactions above Rs 2000. The government is working on schemes to encourage UPI transactions.
The Finance Ministry has categorically denied reports of imposing 18% GST on UPI transactions above Rs 2,000. In the past few days, various media outlets have been reporting that GST will be levied on UPI transactions above Rs 2,000.
But now the government has clarified that there is no such plan. The Finance Ministry, while giving an official clarification, has said that the government has no plans to impose GST on UPI transactions.
On the contrary, there are incentive schemes being launched by the government to boost UPI transactions. These measures are being implemented to encourage small value digital transactions.
The Finance Ministry clarified that Merchant Discount Rate (MDR) is not applicable on UPI or P2M (Person to Merchant) transactions. Since 2020, CBDT has removed this charge from UPI transactions, hence GST is not applicable on such transactions.
GST is levied only on MDR charged on transactions made through devices like credit cards. Hence, the common citizen will not have to pay any additional tax while making purchases or transferring money through UPI.
The government has appealed to citizens not to believe such rumors. The government’s clear intention is to strengthen the digital payment system and care is being taken to ensure that no financial hurdles are created.
The government has once again clarified that no GST will be applicable on UPI transactions. Therefore, it has appealed to the customers to continue making digital transactions without hesitation. It has also been said that they should not believe in any such rumors.
