NPCI says merchants can offset GST on UPI MDR against goods-sale GST
NPCI said GST paid on merchant discount rate charges for eligible UPI payments can be adjusted against GST payable on goods sold. MDR applies to merchant transactions above Rs 2,000, while transactions up to that threshold account for over 96% of UPI merchant-payment volume.
What happened
National Payments Corporation of India (NPCI) · NPCI said GST paid by merchants on UPI MDR can be offset against GST owed on goods sold. MDR applies only to
Key facts
- MDR applies to person-to-merchant transactions above Rs 2,000
- UPI transactions up to Rs 2,000 have zero MDR
- Merchants with monthly UPI receipts up to Rs 1 lakh are not liable for MDR
- Flat Rs 5 levy on select transactions above Rs 2,000
- 0.4% merchant-payment fee above Rs 2,000, capped at Rs 300 per transaction
What changed
NPCI said GST paid by merchants on UPI MDR can be offset against GST owed on goods sold. MDR applies only to merchant payments above Rs 2,000, while most small-value UPI transactions remain exempt.
Why this matters
GST-registered merchants can reduce the net cost of UPI MDR on eligible payments above Rs 2,000 by offsetting GST on those charges against output GST on goods sales.
What to watch
- Formal NPCI, CBIC or GST authority guidance specifying eligible transaction types, invoice requirements and input-tax-credit restrictions.
- Changes in the Rs 2,000 MDR threshold, UPI pricing rules or government subsidy support for low-value UPI transactions.
- Merchant-acquirer announcements of revised UPI MDR, GST invoicing features or high-ticket UPI acceptance programs.
- UPI average ticket-size growth and the share of merchant GMV occurring above Rs 2,000.
- GST audit disputes or industry requests for clarification on whether merchants can claim credits across marketplace, franchise and aggregator structures.