In response to the growing misinformation circulating on social media, the Ministry of Finance has issued a strong clarification regarding the claims that Goods and Services Tax (GST) will be levied on UPI transactions over Rs 2,000. The government has categorically denied such claims, calling them completely false and misleading. In an official statement, the government emphasized that no such proposal is currently being considered.

Clarification on GST for UPI Transactions

The government responded to reports and social media posts suggesting that an 18% GST would be levied on UPI payments exceeding Rs 2,000. According to the statement, there is no basis for such claims. The Ministry of Finance clarified that GST is applicable on certain charges, particularly the Merchant Discount Rate (MDR), which is related to person-to-merchant (P2M) transactions. However, the Central Board of Direct Taxes (CBDT) removed the MDR charge on P2M UPI transactions back in January 2020. As a result, there is no GST applied to UPI payments because no MDR is charged for these transactions.

Fake Claims and Clarifications

Several fake social media posts claimed that the government was considering imposing GST on UPI transactions beyond Rs 2,000. The Ministry of Finance took to X (formerly Twitter) to post a clear statement, asserting that these claims were completely false and lacked any factual basis. The ministry also posted a reminder stating, “Currently, there is no such proposal before the Government.”

The official statement further detailed that the government has been committed to promoting the use of digital payments via UPI, which has seen remarkable growth in recent years. The volume of UPI transactions has seen an exponential rise from Rs 21.3 lakh crore in FY 2019-20 to a staggering Rs 260.56 lakh crore by March 2025.

Government’s Focus on Digital Payments

As digital payment platforms continue to thrive, the government's stance has remained firm in encouraging UPI as a viable, efficient, and GST-free method of conducting payments. By removing MDR charges and ensuring no additional taxation on UPI, the government aims to create a conducive environment for cashless transactions and expand the reach of digital finance across India.

The Ministry also reaffirmed its commitment to fostering digital payments in India, aligning with the country's larger agenda to enhance the financial inclusion of all citizens and businesses through initiatives like UPI, which has gained tremendous acceptance since its inception.

Conclusion

The government’s clarification has come at a crucial time, as rumors regarding GST on UPI transactions were creating confusion among the public. With a clear stance now established, it is important for the public to disregard any misleading claims and rely only on official statements from trusted sources like the Ministry of Finance. As UPI transactions continue to grow at an unprecedented pace, the government’s focus remains on promoting digital payments while ensuring no additional taxes burdening UPI users.

Thus, for those using UPI for transactions above Rs 2,000, there is no need for concern regarding any new tax proposals. The UPI ecosystem remains tax-free, and the government is working toward enhancing its reach and efficiency further.

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