GST on UPI transactions: Greeting on the confusion that rumors of proposed 18% GST on UPI transactions for amounts above Rs 2000 have created for the immense number of users spread across India, the Finance Ministry has put an end to all these speculations, affirming the fact.
Government Clarifies- No GST on UPI Transactions.
The Finance Ministry has strongly denied these rumors, calling them “false, misleading, and baseless.” The official statement from the ministry since there is no proposal to impose goods and services tax on the UPI payment system, be it the transaction value.
The government has reaffirmed its commitment to promoting digital payments and providing a hassle-free experience for users. These days, UPI transactions do not suffer from any kind of taxation, and the public is advised not to trust any rubbish whistles on the matter.
When GST Applies to Digital Payments
Now, while GST is not applicable on UPI transactions, it becomes imperative for us to clarify when GST is applicable. The tax is imposed only on service charges such as the Merchant Discount Rate (MDR) applied by payment gateways or banks. However, since January 2020, the central board of Direct Taxes (CBDT) has removed any such charges on person to merchant (P2M) UPI transactions, thus ensuring customers face no extra charges.
India Leads the Global Digital Payments Revolution
India is the world’s fastest-growing country in real-time digital payments. According to the 2024 report by ACI Worldwide, 49% of all real-time digital transactions in 2023 came out of India. This substantiates the ubiquitousness of UPI and other digital payment systems, being underpinned by relentless government push and user trust.
No GST on UPI Payments
The government stays firm and clear with its announcement- no taxes under GST for UPI transactions. Anything contrary is pure falsity and must be dismissed. Becoming much ahead in the digital payment realm, UPI continues to be the fastest, secure, and burden-free way to transfer money.