CBIC clarification on GST levying and registration

The claims that the Government is considering levying Goods and Services Tax (GST) on UPI transactions over ₹2,000 are completely false, misleading, and without any basis. Currently, there is no such proposal before the Government.

GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments.

Effective January 2020, the Central Board of Direct Taxes (CBDT) has removed the MDR on Person-to-Merchant (P2M) UPI transactions through the Gazette Notification dated 30th December 2019.

Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions.

The Government remains committed to promoting digital payments via UPI.

To support and sustain the growth of UPI, an Incentive Scheme has been operational from FY 2021-22. This scheme specifically targets low-value UPI (P2M) transactions, benefiting small merchants by alleviating transaction costs and promoting wider participation and innovation in digital payments.

CBIC officers are further instructed to Officers have been instructed to strictly adhere to the prescribed list of documents provided in registration application form. Requisite documents in specific cases to be uploaded with registration application form have also been delineated in the instructions. Officers have been directed not to issue notices based on presumptive grounds, minor discrepancies, or for additional documents that are not essential for processing applications. Officers have been also directed to seek approval of the concerned Deputy/Assistant Commissioner in cases where document apart from the listed documents is required to be sought.

The Zonal Principal Chief Commissioner/Chief Commissioners have been advised to devise mechanism to closely monitor and issue suitable trade notices, wherever required. It has also been advised that the strict action should be taken against the officers deviating from these instructions.