NPCI Says GST on UPI MDR Will Not Burden Small Merchants
- The NPCI addressed concerns that an 18% GST on UPI Merchant Discount Rate creates an "additional burden" for sellers, labeling these fears as "misplaced" while clarifying that digital payment costs for merchants remain largely unchanged.
- Government data indicates transactions up to Rs 2,000 constitute more than 96 per cent of UPI merchant transaction volume, meaning the vast majority of payments remain unaffected by the Merchant Discount Rate or any associated GST.
- Merchants can adjust GST paid on the Merchant Discount Rate against tax payable on Goods sales, functioning "in the same manner that input taxes are set off against output tax liability," the NPCI said.
- Unregistered businesses with annual turnover under Rs 40 lakh may still pay GST on payments exceeding Rs 2,000 if they receive more than Rs 1 lakh monthly, though most Small and Medium Enterprises remain exempt.
- Dilip Desai, Founder and Chairman of DHC, advised Small and Medium Enterprises to review accounting systems to ensure transaction-level Merchant Discount Rate and corresponding GST are correctly matched with bank and payment gateway statements.
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21 Articles
Government Clarifies UPI Merchant Fee Will Not Burden Consumers
Government sources clarify that the 0.4% merchant discount rate (MDR) on UPI transactions above Rs 2,000, effective October 15, will not be passed on to consumers. The charge, paid by merchants, aims to create a sustainable revenue framework for the digital payments ecosystem, with funds shared among banks and UPI entities. Small merchants using QR codes for up to Rs 1 lakh monthly are exempt.
UPI mechanism coming soon to ensure MDR not passed onto consumers on transactions above Rs 2,000
From October 15, a 0.4 per cent MDR will apply to person-to-merchant UPI payments above Rs 2,000. Merchants, not consumers, will pay the charge, capped at Rs 300 for transactions of Rs 75,000 or more.
Banks to monitor merchants to ensure UPI MDR is not passed on to consumers: Govt sources - The Tribune
Banks will monitor merchants to ensure that the Merchant Discount Rate (MDR) on UPI transactions is not passed on to consumers, while the Indian Banks' Association (IBA) will develop a mechanism to prevent merchants from charging customers extra for digital payments, according to government sources.
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