The government has dismissed reports that it is planning to levy Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions above Rs 2,000, calling them "false, misleading and baseless".

"No such proposal is under consideration," the government said in an official press release.

Currently, there are no additional charges like GST on UPI payments made to merchants in particular. This is because the government had removed the Merchant Discount Rate (MDR) - a fee usually levied on digital payments - for such transactions in January 2020. The fact is that since there is no MDR, there is no GST either.

The government also stressed its strong support for digital payments via UPI. To make it easier for small shopkeepers and businesses to accept UPI payments, a special incentive scheme has been in place since 2021. Under this scheme, the government is also rewarding service providers for covering transaction costs and encouraging more people to use UPI.

The incentives under the scheme show how serious the government is about promoting digital payments: Rs 1,389 crore in 2021-22, Rs 2,210 crore in 2022-23, and Rs 631 crore in 2023-24.

The government said that these incentives have led to a huge growth in digital payments in India. According to a report by ACI Worldwide, 49% of all real-time digital transactions globally took place in India in 2023.

UPI payments have grown by more than twelve times in just five years. Digital payments in India are expected to grow from Rs 21.3 lakh crore in 2019-20 to over Rs 260 lakh crore by March 2025. Payments to merchants alone reached Rs 59.3 lakh crore, reflecting increasing merchant acceptance and consumer confidence in digital payment methods, the government said.