In a positive move for millions of UPI users, the Ministry of Finance has responded to the proposed imposition of GST on UPI payments exceeding a certain limit.
In the Rajya Sabha, a query was raised by Congress MP Anil Kumar Yadav on July 22. The question is concerned with the proposal of the government to impose the GST on UPI transactions of more than Rs 2000.
The MP has questioned whether the government has obtained any representation from the public at large not to introduce these measures that shall affect the common man.
Minister of State In The Ministry of Finance, Pankaj Chaudhary, answering the query, cited that the same decision has not been taken by the government.
“As informed by the Department of Revenue, GST rates and exemptions are decided based on recommendations of the GST Council, which is a Constitutional body comprising members from both the Centre and States/UTs. There is no such recommendation from the GST Council,” Chaudhary stated.
Earlier in April this year Ministry of Finance confirmed that the Government remained devoted to promoting digital payments through UPI.
“GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments. Effective January 2020, the CBDT has removed the MDR on Person-to-Merchant (P2M) UPI transactions through the Gazette Notification dated 30th December 2019,” the Ministry of Finance expressed.
No GST shall be applied on these transactions, as at present, no MDR is charged on UPI transactions.
An Incentive Scheme has been operational from FY 2021-22 to support and sustain the growth of UPI. The same scheme points low-value UPI (P2M) transactions that provide an advantage to small merchants via alleviating the costs of transactions and promoting wider participation and innovation in digital payments.
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