Will GST Be Imposed on UPI Transactions Above ₹2,000? Here’s What Experts Say
Key Highlights:
GST on UPI Payments has become a hot topic of public debate after various reports surfaced suggesting that GST could soon be levied on UPI transactions above ₹2,000. As India’s digital payments landscape continues to expand rapidly, such news has sparked concerns among individual users, merchants, and the fintech industry alike.
In March alone, India recorded ₹24.77 lakh crore in UPI transactions, underscoring its critical role in everyday financial exchanges. With the government heavily promoting digital economy, the idea of slapping 18% GST on UPI transactions has raised several eyebrows—but is it even real?
Experts Dismiss Rumours as Hypothetical
According to Anand K Rathi, Co-founder of MIRA Money, the rumors about GST on UPI transactions are misleading. He clarified:
“It is incorrect to assume that there will be a GST on UPI transactions above ₹2,000. Instead, the platforms providing UPI payment services may start charging a small service fee. The 18% GST would apply on that fee—not the transaction amount itself.”
He added that UPI is fundamentally a bank-to-bank transfer, similar to NEFT or IMPS, which are typically free of GST unless a service fee is involved.
Why This Won’t Affect Daily UPI Users Yet
Most users conducting peer-to-peer (P2P) or small-scale person-to-merchant (P2M) transactions should remain unaffected. As per Manish Kumar Goyal, CMD of Finkeda:
“UPI is a digital enabler, especially in small towns and rural India. Imposing GST will be a massive blow to India’s cashless economy movement. Thankfully, current policy still favors free usage for low- and medium-volume merchants.”
He emphasized that any charges, if implemented, are likely to impact only high-volume P2M transactions, not daily payments between friends or at local shops.
Digital Inclusion at Risk?
Appalla Saikiran, CEO of SCOPE, cautioned that introducing GST on UPI may backfire:
“UPI has drastically improved financial inclusion by offering an accessible and affordable platform for digital payments. Taxing it would directly go against its foundational principles.”
He warned that such a move could increase operational costs for small fintech firms and discourage user adoption, especially among the economically vulnerable.
Industry Caution: Wait for Official Word
Akash Nangia, Co-founder at Techjockey, acknowledged the intent behind formalizing digital transactions but noted:
“India’s digital payments ecosystem is a marvel of inclusivity. A sudden GST implementation could disrupt the adoption rate, particularly in Tier 2 and Tier 3 cities.”
Experts collectively advised the public to refrain from panicking, as there is currently no official confirmation of GST on UPI transactions.
What This Means for You
- No GST is currently charged on UPI transfers.
- If imposed, GST will apply only to service fees, not on the total transaction amount.
- Most users and small businesses will likely remain unaffected.
- Always verify with official government sources before reacting to circulating news.
How to Take Action
- Continue using UPI for regular transactions.
- Stay informed by following updates from NPCI, RBI, or the Ministry of Finance.
- Monitor any fee notifications from UPI platforms like PhonePe, Paytm, and Google Pay.
- Business owners should track changes in merchant fee policies to stay compliant.
Who Will Be Affected
- Only users performing high-volume P2M transactions may see platform fees, which could carry 18% GST on the fee, not on the transaction amount.
- Small fintech platforms may face cost adjustments depending on new fee structures.
- Low-value transactions, which form the bulk of UPI activity, are unlikely to see changes soon.
GST on UPI Payments – Fact or Fiction?
In conclusion, GST on UPI Payments remains a speculative issue. As of now, there’s no government directive or policy enforcing GST on UPI transactions above ₹2,000. Experts unanimously believe that any potential charges would apply only to platform service fees, not the full transaction value.
Until an official announcement is made, India’s digital payment landscape, led by UPI, continues to remain tax-free and accessible for most users.
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