UPI merchant discount rate cut to 5% discussed by GST Council

The GST Council, meeting for its 57th session, deliberated on a proposal to reduce the Goods and Services Tax applicable to the UPI Merchant Discount Rate (MDR) from the current 18% to a flat 5%.

Several states had earlier expressed concerns over the high GST on UPI MDR, fearing it could deter digital transactions. The new framework proposes a nominal charge of 0.4% on person‑to‑merchant transactions exceeding ₹2,000, while the vast majority—approximately 96%—of such transactions will see no change.

Finance Minister Nirmala Sitharaman emphasized that the revision is timed to strengthen India’s digital payments ecosystem, making high‑value merchant transactions more affordable and encouraging greater adoption of UPI across the country.