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Will GST Be Imposed on UPI Transactions? Experts Clear the Confusion
Unified Payments Interface (UPI) has transformed the way India transacts. With zero fees and lightning-fast transfers, UPI has become a go-to choice for millions. But recently, a wave of confusion spread across social media and messaging platforms — will UPI payments now attract 18% GST?
Let’s break down the facts and hear from industry experts.
The Rumour: 18% GST on UPI Payments Over ₹2,000?
Many reports suggested that the government is planning to impose an 18% GST on UPI transactions, especially those above ₹2,000. The news sparked concern among regular users and small business owners, who rely heavily on UPI for daily payments.
However, financial experts have clarified that no such tax on the transaction amount is being introduced — at least, not yet.
What Experts Say
Anand K Rathi, Co-founder of MIRA Money, cleared the air by explaining how GST applies in such cases.
“UPI is a bank-to-bank transfer system, and such transfers are typically free. There is no GST on the total transaction amount.”
Instead, he explained, if UPI platforms like PhonePe, Paytm, or Google Pay start charging a service fee, then GST would only apply to that service charge — not on the transaction amount itself.
So if a platform charges ₹1 as a fee, the 18% GST will apply only to that ₹1, not the ₹2,000 you’re transferring.
Will It Affect You?
At present, UPI transactions remain free for most users, especially peer-to-peer (P2P) and small merchant payments. The only cases where fees may apply are large-scale merchant transactions or excessive monthly usage beyond bank limits.
Manish Kumar Goyal, Chairman & MD of Finkeda, warned that applying charges to regular UPI usage could slow down India’s digital growth, especially in rural areas where UPI adoption is growing rapidly.
“If UPI becomes expensive, people might go back to using cash,” he said.
Government Focus Remains on Digital Push
India has made strong strides toward becoming a cashless economy. UPI is one of the most successful digital payment systems globally, handling record-breaking transaction volumes. In March 2025, UPI transactions crossed ₹24.77 lakh crore.
The government has shown consistent support for promoting digital payments, and there is no official notification of any direct GST being applied on UPI transactions for users.
Charges, if any, may only apply to high-volume merchant payments (P2M), and not to P2P or small merchant transactions.
So for now, keep using UPI as you always have — it's free, safe, and fast.
