Confused about GST on UPI Payment? You’re not alone! Recent rumors suggested a new 18% GST on UPI payments above ₹2,000, but the Indian government has officially denied these claims.
In this guide, we’ll break down:
✅ Latest government clarifications (April 2025)
✅ Current UPI transaction rules
✅ Potential future changes
✅ How to avoid extra charges
1. Is There GST on UPI Transactions in 2025?
No! The Finance Ministry confirmed that no GST is applied to UPI payments, even for transactions above ₹2,000
(Source: TOI)
Why Were There Rumors?
- Some reports claimed the government was considering an 18% GST on UPI payments over ₹2,000.
- These were false—the government clarified that no such proposal exists
Key Official Statement:
“Claims that GST will be levied on UPI transactions over ₹2,000 are completely false, misleading, and without any basis.”
— Ministry of Finance, India (April 2025
2. How UPI Transactions Work in 2025
Current Rules:
- No GST on any UPI payments (P2P or P2M) 37.
- No Merchant Discount Rate (MDR) since 2020 → No hidden fees.
- UPI transaction limits:
- ₹1 lakh/day (general)
- ₹2 lakh/day (for investments, insurance)
- ₹5 lakh/day (taxes, education, hospitals)
Will GST Ever Apply to UPI?
- Only if MDR is reintroduced (currently zero).
- The government is promoting digital payments, not taxing them
3. What About UPI Wallet Transactions?
If you use UPI via wallets (Paytm, PhonePe, Amazon Pay):
- No GST on bank-linked UPI.
- Interchange fee (0.5%-1.1%) applies only on wallet transactions above ₹2,000—but merchants pay this, not users.
4. What Should UPI Users Do?
- No need to panic—GST-free UPI continues.
- For large payments (₹50,000+):
- Check if the merchant adds extra charges (rare).
- Use IMPS/NEFT for very high-value transfers.
- Stay updated—follow NPCI & RBI announcements.
5. Future of UPI & Digital Payments
- UPI growth: Transactions surged from ₹21.3L cr (2019) to ₹260L cr (2025).
- Government incentives: ₹3,631 cr paid in 2023-24 to promote small UPI payments.
Final Verdict (April 2025)
🔹 No GST on UPI (confirmed by the Finance Ministry).
🔹 No extra charges unless you use wallets for big merchant payments.
🔹 UPI remains India’s #1 free payment method.
Got questions? Drop them below! ⬇️
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