The Indian government is currently thinking about adding Goods and Services Tax (GST) on UPI transactions that are above Rs. 2,000, according to various news reports. This step is being considered to improve tax collection and bring more digital transactions under the formal tax system.
As per early discussions, an 18% GST may be charged on high-value digital payments made through UPI (Unified Payments Interface). This is the same tax rate applied to many other digital services in the country. If approved, this rule could apply to both peer-to-peer (like sending money to friends or family) and merchant payments (like paying at a shop or online).
Why Is the Government Considering GST on UPI?
The government wants to make sure that more digital transactions are properly tracked and taxed. Many people now use UPI for everything from paying for groceries to sending money instantly to others. While small payments are likely to remain free of GST, larger transactions (above ₹2,000) might soon attract a tax.
Officials believe this move will help boost tax compliance and reduce informal or untaxed transactions happening through digital channels.
How Much GST Might Be Charged?
If the plan goes ahead, a standard 18% GST rate may be applied to eligible UPI transactions. This is the same rate that applies to most digital and online services. However, no official date for this rule has been shared yet, and it is still under review by the government.
What Will Be Covered?
As per reports, the tax may apply to:
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Peer-to-peer transfers: Such as when you send money to a friend.
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Merchant payments: Like when you pay at a retail store or for services through UPI.
But again, only those payments that exceed Rs 2,000 in a single transaction might fall under this tax proposal.
GST Collections Hit New Highs
Interestingly, this proposal comes at a time when India’s GST collections are already rising. In February 2025, total GST collections went up by 9.1% to reach ₹1.84 lakh crore, as per official figures released on March 1.
Here’s how the collection was divided:
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Central GST (CGST): Rs 35,204 crore
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State GST (SGST): Rs 43,704 crore
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Integrated GST (IGST): Rs 90,870 crore
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Compensation Cess: Rs 13,868 crore
These numbers show that the economy is becoming more tax-compliant. Still, the government sees further room for improvement, especially in the growing digital payment space.
As of now, the government has not made a final decision on this GST proposal. The idea is still being studied, and more details will likely be shared in the coming weeks or months. For now, UPI payments remain GST-free, no matter the amount.
If this change is approved, UPI users making high-value transactions might have to pay 18% GST. While small daily payments are expected to stay unaffected, businesses and individuals who often deal with large UPI transactions should keep an eye on upcoming announcements.
