GST on UPI Payments in 2025: What It Means for Users and Merchants in India

Unified Payments Interface (UPI) has revolutionized digital transactions across India. With its rapid adoption, the government and regulatory bodies have kept a close watch on the taxation framework. In 2025, discussions around the application of GST on UPI payments have once again surfaced, creating confusion among users and merchants alike.

Is There GST on UPI Payments?

As of now, UPI payments themselves are not directly taxed. When an individual transfers money using a UPI app such as Google Pay, PhonePe, or Paytm, there is no Goods and Services Tax (GST) levied on that peer-to-peer transaction.

However, when UPI is used in a commercial or merchant context, the scenario may vary:

• Merchants receiving payments via UPI could be liable to GST on the goods/services sold, not on the UPI transaction itself.

• Payment gateways or banks offering value-added services may charge service fees, on which GST applies.

• For high-volume or enterprise-level UPI services, platform service charges might include GST.

GST on UPI: Clarification in 2025

Recent updates in 2025 have prompted the government to issue clarifications that no new GST is being directly imposed on UPI payments. The focus remains on regulating service providers, ensuring that businesses collecting payments through UPI adhere to tax rules on their goods and services—not the transaction mode.

Impact on UPI Users

• No GST for personal use: Sending or receiving money among friends or family remains unaffected.

• No direct charges for customers: UPI remains free for end-users in most banking apps.

• Merchants may include GST in product/service pricing, but not due to UPI usage.

What Merchants Need to Know

• Continue filing GST as per product/service category.

• Use UPI-enabled POS systems that can generate GST-compliant invoices.

• Stay updated on payment gateway fees and tax compliance if using third-party UPI aggregators.