Will GST Be Imposed on UPI Transactions Above ₹2,000? Experts Clear the Air

What Triggered the Uproar?

Recently, multiple reports began circulating, claiming that a Goods and Services Tax (GST) of 18% may be applied to UPI transactions exceeding ₹2,000. This unconfirmed development sent shockwaves through India’s thriving digital payment ecosystem, especially among small business owners, daily wage earners, and youth who rely heavily on UPI for day-to-day payments.

UPI: A Lifeline of Digital India

India’s digital revolution owes much of its success to the seamless, fast, and free-to-use UPI system. As per data from the National Payments Corporation of India (NPCI), UPI transactions in March 2025 hit a record high of ₹24.77 lakh crore, a testament to its growing significance. Be it paying street vendors, splitting restaurant bills, or transferring rent—UPI has become an indispensable part of daily life.

What Are Experts Saying?

While the news around GST on UPI created ripples, finance experts were quick to step in and clarify.

Anand K Rathi, co-founder of MIRA Money, believes the current panic is based on misinterpretation.
“It’s incorrect to say GST will be directly charged on UPI payments above ₹2,000,” Rathi explained. “The actual possibility is that UPI service providers like PhonePe, Google Pay, or Paytm might introduce a nominal fee for certain services in the future. If that happens, only that service fee will attract GST at 18%, not the entire transaction value.”

He added that most UPI payments are essentially bank-to-bank transfers. “These are usually free, unless one crosses specific usage limits or engages in certain types of fund transfers,” he said. “Even if any fee comes into play, GST would apply only to that fee—not the full amount transferred.”

Another Perspective: Digital Setback or Hypothetical Concern?

Manish Kumar Goyal, Chairman & Managing Director of Finkeda, echoes similar views but expresses concern over the implications.

“If such a policy is ever introduced, it could be a major setback for India’s goal of becoming a cashless economy,” Goyal said. “UPI has empowered people in small towns and villages, enabling smooth, fast, and secure transactions without needing to carry physical cash. Charging GST, even indirectly, might discourage usage among lower-income groups.”

Goyal also stressed that any such move would be counterintuitive given the government’s active promotion of digital payment platforms.

The Bigger Picture: No Official Word Yet

At present, there’s no official notification or announcement from the Ministry of Finance or GST Council confirming any changes to UPI fee structures or the introduction of GST on transactions above ₹2,000. The National Payments Corporation of India (NPCI) and RBI have also remained silent on this matter.

So, for now, the talk of GST on UPI appears to be a case of miscommunication or misinterpretation of internal policies or proposals.

What Should Users Do?

For now, there’s no reason to panic or change your payment habits. UPI remains free for everyday use, and no GST is charged on direct transfers. It’s advisable to stay alert but rely only on official channels for updates.

In an era where misinformation spreads faster than truth, it’s important to verify news before jumping to conclusions. The idea of taxing UPI payments may seem like a nightmare to many, but until there’s a formal decision, it’s safe to call it what it is—hypothetical.