In response to a query raised in the Rajya Sabha on July 22, 2025, the Ministry of Finance clarified that GST (Goods and Services Tax) is not levied on UPI-based transactions, regardless of the amount involved. This clarification was necessary due to growing concerns and misinformation circulating on social media platforms suggesting that UPI transactions exceeding ?2,000 might attract GST.

The clarification stated that:

"UPI is a mode of payment and not a transaction type. Hence, GST is not applicable on UPI transactions in itself. Whether a transaction attracts GST depends on the nature of the underlying supply (goods or services), not on the payment method."

This statement affirms that using UPI, NEFT, RTGS, or any other payment mechanism does not change the tax liability of the transaction.

The government further highlighted its commitment to boosting the adoption of digital payments by keeping UPI services free and tax-neutral, ensuring no burden is passed on to small traders or consumers.

This announcement has been welcomed by:

• Fintech companies and digital payment aggregators
• Retailers using UPI as a preferred method for receiving payments
• Consumers, especially in rural and semi-urban areas who rely heavily on UPI

Industry experts hailed this move as reinforcing the digital economy push and eliminating fears of unexpected compliance issues.