For the past few days, some posts have been going viral on social media claiming that tax will now be imposed on payments above Rs 2000 through UPI. The Finance Ministry has also issued information in this regard. Will UPI payments be taxed? Go through this article and know in details.
Govt is Not Considering Imposing GST on UPI Transactions Above Rs 2000
The government has clarified that they are not considering imposing GST on UPI transactions worth more than Rs 2000. Clarifying reports that the government is considering imposing Goods and Services Tax (GST) on UPI transactions worth more than Rs 2,000, the Finance Ministry has said that “it is completely false and baseless.” There is no such proposal before the government at present, the ministry said in a statement. GST is levied on certain charges like Merchant Discount Rate (MDR).
The ministry also said that these reports are false and the government is committed to promoting digital payments through UPI. There is no such proposal before the government at present. The Central Board of Direct Taxes (CBDT) has removed MDR on UPI transactions between consumers and merchants (P2M) with effect from January 2020. The ministry said, ‘Since no MDR is currently applicable on UPI transactions, no GST will be applicable on these transactions.’
UPI Transactions have Witnessed Rapid Growth
The ministry also said that the government is committed to promoting digital payments through UPI. UPI transactions are growing rapidly, which is why India’s UPI is now being used for payments in many countries of the world. UPI transactions is increasing from Rs 21.3 lakh crore in the financial year 2019-20 to Rs 260.56 lakh crore by March 2025. People are now preferring to pay through UPI instead of cash.
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