The Ministry of Finance (MoF) has clarified that they are not planning to impose Goods and Services Tax (GST) on the Unified Payments Interface (UPI) services.
The MoF tweeted that the UPI is a digital public good with immense convenience for the public & productivity gains for the economy. The government is not considering levying any charges for UPI services. Also, the concerns of the UPI service providers for cost recovery have to be met through other means.
The MoF added that the government had provided financial support for the digital payment ecosystem last year. Also, it has announced the same this year as well to encourage further adoption of digital payments and promotion of payment platforms that are economical and user-friendly.
UPI is an instant real-time payment system developed by the National Payments Corporation of India (NPCI). This system facilitates peer-to-peer, inter-bank, and person-to-merchant transactions. Also, UPI is an open-source application programming interface that runs in addition to the immediate payment service.
MoF clarified this issue amid a recent Reserve Bank of India (RBI) report titled “Discussion Paper on Charges in Payment System”. RBI mentioned in the report that they are thinking of charging fees for each financial transaction made through the UPI system. The move aims at assessing the possibility of recovering the cost of building and running the UPI infrastructure.
According to the RBI, fund transfers made through UPI are equivalent to those made through Instant Payment Service (IMPS), so UPI should charge the same fee as IMPS. However, RBI has to take a final decision in this regard.
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DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.