Government sources state that customers should not be charged for merchant UPI payment fees despite the application of GST on MDR.
Reader brief
Through the Reader lens: The Indian government has clarified that while GST applies to Merchant Discount Rate charges on UPI transactions, these costs should not be passed on to customers. Businesses are permitted to claim input tax credit to offset the GST paid on these fees. Starting October 15, merchants will incur fees for UPI payments exceeding ₹2,000, and officials intend to monitor enforcement to prevent businesses from shifting these costs to consumers.
What to watch next
- Monitoring of merchant compliance to prevent cost-shifting to consumers
- Potential adjustments to fee structures for stockbroker UPI-based inflows
- Further clarification on enforcement mechanisms for merchant charges
What was said2
Attributed, verbatim. Every quote is checked against the article it came from. One that does not match is not shown.
Government sources
2 quotes“There is no separate GST on MDR.”
In the article
…do not pass these costs on. The government has already discussed the issue with payment aggregators, ANI added. Efforts will also be made to address gaps in enforcement. On taxation, government sources said, “ There is no separate GST on MDR. ” However, they clarified that GST would apply to MDR charges on UPI payments. Businesses can claim input tax credit against the GST paid. Quick answers to key questions For UPI payments above ₹2,000, merchants are…
“GST will currently be levied on MDR charges applicable to UPI transactions. However, businesses will be able to claim input tax credit against the GST paid. Businesses have the option to set off the GST liability”
In the article
…remain a percentage of transactions. A flat fee, such as ₹2 per transaction, may be more beneficial than a percentage charge, as it could encourage UPI use in investments while keeping costs predictable for consumers. “ GST will currently be levied on MDR charges applicable to UPI transactions. However, businesses will be able to claim input tax credit against the GST paid. Businesses have the option to set off the GST liability ," the source added. (This is a developing story. Check back for more details.) Sounak Mukhopadhyay covers trending news, sports and entertainment for LiveMint. His reporting focuses on fast-moving stories, box office…
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