Quick Summary
The National Payments Corporation of India (NPCI) has clarified that the introduction of Merchant Discount Rate (MDR) on certain high-value UPI merchant transactions will not make everyday digital payments costly for consumers or place an additional GST burden on most small merchants. The clarification comes after concerns surfaced that GST applicable on MDR could increase the cost of accepting UPI payments, particularly for small businesses and merchants. NPCI said these concerns do not reflec
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FAQ :
No, consumers will not face additional charges for UPI transactions. Person-to-Person (P2P) transactions remain free, and approximately 96% of Person-to-Merchant (P2M) transactions up to Rs 2,000 will continue to have zero MDR, meaning no extra cost.
Most small merchants will not be affected. Those receiving up to Rs 1 lakh per month via UPI QR payments will continue to benefit from zero MDR. The new MDR rules primarily apply to specific P2M transactions above Rs 2,000.
For specified P2M transactions above Rs 2,000, an MDR of 0.4% will apply. For transactions of Rs 75,000 and above, the MDR is capped at Rs 300. Certain sectors like fuel and telecom have a flat MDR of Rs 5 per transaction.
No, the framework does not introduce GST on UPI payments themselves. GST may apply to the MDR (a service charge), but for eligible registered merchants, this can be claimed back as input tax credit, meaning it's not an automatic out-of-pocket expense.
All Person-to-Person (P2P) UPI transactions are exempt from MDR. Additionally, Person-to-Merchant (P2M) transactions up to Rs 2,000, and transactions for small merchants with monthly UPI receipts up to Rs 1 lakh, also have zero MDR.
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