Is Government Considering Proposal To Levy GST On UPI Transactions Of Over Rs 2000? Finance Ministry Responds

On July 22, Congress MP Anil Kumar Yadav raised a query in the Rajya Sabha, asking whether government has got any proposal to levy GST on UPI transactions of over Rs 2,000. Find out the response by Finance Ministry.

New Delhi: In what will bring cheers to millions of UPI users, the Ministry of Finance has given its response on the levying of GST on UPI transactions above a certain limit.

On July 22, Congress MP Anil Kumar Yadav raised a query in the Rajya Sabha. He posed questions regarding government's proposal to levy GST on UPI transactions of over Rs 2,000. The MP also enquired whether the government has received any representation from the public at large not to introduce such a measure, which will seriously affect the common man.

Responding to the query Minister Of State In The Ministry Of Finance Pankaj Chaudhary said that no such decision has been taken by the government.

"As informed by Department of Revenue, GST rates and exemptions are decided on the basis of recommendations of the GST Council, which is a Constitutional body comprising of members from both the Centre and States/UTs. There is no such recommendation from the GST Council," Chaudhary said.

The Ministry of Finance had earlier confirmed in April this year the Government remains committed to promoting digital payments via UPI.

"GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments. Effective January 2020, the Central Board of Direct Taxes (CBDT) has removed the MDR on Person-to-Merchant (P2M) UPI transactions through the Gazette Notification dated 30th December 2019," the Ministry of Finance had said.

Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions.

To support and sustain the growth of UPI, an Incentive Scheme has been operational from FY 2021-22. This scheme specifically targets low-value UPI (P2M) transactions, benefiting small merchants by alleviating transaction costs and promoting wider participation and innovation in digital payments.