UPI MDR Won’t Burden Small Merchants

The government has clarified that GST on UPI Merchant Discount Rate (MDR) will not increase the cost of digital payments or put an additional burden on small merchants.

The National Payments Corporation of India (NPCI) said reports suggesting otherwise are incorrect. According to NPCI, UPI merchant transactions of up to ₹2,000 will continue to attract zero MDR and zero GST impact. Such transactions account for more than 96% of UPI merchant transaction volume.

NPCI also clarified that merchants with monthly UPI receipts of up to ₹1 lakh are not required to pay MDR. For applicable transactions, GST paid on MDR can be adjusted against the GST payable on sales through the input tax credit mechanism.