UPI MDR Above Rs 2,000 to Attract 18% GST, Merchants Can Claim Input Tax Credit
Eligible merchants can claim input tax credit, and tax experts estimate the change could generate up to Rs 5,184 crore a year in GST revenue.
- Starting October 15, the National Payments Corporation of India will impose an 18% Goods and Services Tax on a 0.4% Merchant Discount Rate for UPI payments to merchants exceeding Rs 2,000.
- While the 18% tax applies to the merchant fee, registered businesses can claim Input Tax Credit to offset costs; Nangia Global Executive Director Indirect Tax Sivakumar Ramjee noted this helps "neutralising the tax hit."
- Strict exemptions for small vendors insulate the retail economy, as 96% of UPI payments remain under Rs 2,000; AMRG Global Managing Partner Rajat Mohan explained the "regulatory structure provides crucial relief."
- A senior finance ministry official argued the GST impact affects few merchants, noting the matter can be "reasonably tackled by the GST Council" when it meets on October 7.
- AKM Global Lead-Indirect Tax Ikesh Nagpal estimates this model could generate Rs 5,184 crore annually in GST collections, based on a uniform 0.4% MDR on monthly transaction volumes of Rs 6 lakh crore.
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UPI Charges or MDR Will Attract 18% GST From October 15: Report | 📰 LatestLY
Starting Oct 15, P2M UPI transactions above INR 2,000 carry a 0.4 per cent MDR plus 18 per cent GST on that fee (total cost INR 47.20 on an INR 10,000 transaction). GST-registered eligible merchants can claim ITC. Flat fees (e.g., INR 5 for railways) and capped fees also have 18 per cent GST applied similarly. 📰 UPI Charges or MDR Will Attract 18% GST From October 15: Report.
UPI payments: GST on MDR applicable, but customers should not bear merchant charges, government sources say
Customers will not incur merchant payment charges as the government ensures businesses don't pass these costs on. Officials are monitoring the implementation closely.
GST of 18 per cent to apply on MDR for UPI payments above ₹2,000: What this means
An 18% GST will be applied to UPI transaction Merchant Discount Rates above 2,000, increasing the effective MDR. Person-to-person transactions are.UPI charges, GST on UPI, Merchant Discount Rate, UPI payment tax, new UPI rules, digital payment changes, transaction charges India, small merchant GST, person to person UPI, UPI for business, credit card MDR, debit card MDR, RuPay debit card, petrol UPI charges, government revenue MDR
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