NPCI says GST on UPI merchant fees will affect only 4% of P2M transactions
NPCI said the proposed 18% GST on MDR for UPI merchant payments above Rs 2,000 has limited exposure: 96% of P2M transactions would remain unaffected. Merchants receiving under Rs 1 lakh monthly via UPI would be exempt from MDR, while GST-registered sellers can claim input-tax credit.
What happened
National Payments Corporation of India (NPCI) · NPCI said GST on MDR for UPI merchant payments above Rs 2,000 will affect only 4% of P2M transactions, while
Key facts
- 18% GST on MDR
- 0.4% MDR for UPI P2M payments above Rs 2,000
- 4% of P2M transactions exceed Rs 2,000
- 96% of P2M payments unaffected by merchant fee/GST
- Rs 1 lakh monthly UPI-receipt exemption threshold
What changed
NPCI said GST on MDR for UPI merchant payments above Rs 2,000 will affect only 4% of P2M transactions, while registered sellers can claim input tax credit. Small merchants receiving under Rs 1 lakh monthly via UPI remain exempt from MDR.
Why this matters
Most UPI merchant payments remain unaffected, but operators with higher-value tickets should prepare for MDR-related cost changes and optimize GST input-credit processes.
What to watch
- Final government notification defining whether the Rs 2,000 threshold applies per transaction, per merchant, or by category.
- Confirmation of the MDR rate, GST treatment, implementation date, and whether GST input-tax credit is operationally available to all registered merchants.
- NPCI and bank/acquirer guidance on merchant-category-code treatment, settlement disclosures, and fee collection.
- Merchant association reactions and any evidence of checkout steering, UPI surcharge attempts, or split-transaction behavior.
- Monthly data on UPI P2M value share versus volume share above Rs 2,000, especially in electronics, jewellery, travel, and durable goods.