Government Clarifies UPI MDR Will Not Burden Small Merchants or Make Digital Payments Expensive

The Government today clarified that GST on UPI Merchant Discount Rate, or MDR, will not burden small merchants or make digital payments expensive. In a social media post, National Payments Corporation of India  (NPCI) has termed such media reports as incorrect. It said, MDR applies only to person-to-merchant transactions above two thousand rupees. It said person-to-merchant transactions up to two thousand rupees continue to have zero MDR and therefore zero GST impact. NPCI stated that transactions of up to two thousand rupees constitute more than 96 per cent of UPI merchant transaction volume. The GST paid on MDR by a merchant will be adjusted against the GST payable on the sale of goods, in the same manner that input taxes are set off against output tax liability. NPCI said that merchants with monthly UPI receipts of up to one lakh rupees are not liable to pay MDR.