GST on UPI Merchant Discount Rate Claimable as Input Tax Credit

A senior finance ministry official clarified that businesses registered under the indirect tax regime can claim an 18% Goods and Services Tax on UPI Merchant Discount Rates as input tax credit.

The 18% GST applies to UPI transactions exceeding ₹2,000 under the revised MDR framework taking effect on October 15, while 96% of peer-to-merchant transactions remain under ₹2,000.

Unregistered small sellers with annual turnovers under ₹40 lakh receiving over ₹1 lakh monthly via UPI might face minor tax impacts, which officials suggest the GST Council can address.