There will be no tax on the UPI (Unified Payments Interface) transactions confirmed by the Finance Ministry. On Friday, the ministry rejected the report about GST (Goods and Services Tax), which was imposed on the UP 2,000 payments, they were called completely false and baseless.
Since January 2020, the merchant (P2M) transaction conducted through UPI has been set on the individual at the merchant discount rate (MDR) zero, which means that GST is not applied to such transactions.
Government Extends UPI Incentive Scheme Till March 2026
To promote digital payments, especially through UPI and RuPay Debit Card, the government has increased the UPI incentive scheme for another year. According to the announcement made on March 19, the plan will now be valid till 31 March, 2026, in which almost. There will be a budget allocation of 1,500 crores.
Union Minister Ashwini Vaishnav said that under this scheme, small shopkeepers will get 0.15% incentive on P2M transactions organized through Rupay Debit Card and BHIM-UPI.
What Are Person to Merchant (P2M) UPI Transactions?
A merchant (P2M) transaction from a person refers to the UPI payment made by a customer to a merchant. Effective from 1 April 2021, this initiative aims to promote the use of RuPay and Bhima-up in daily transactions, especially between small businesses.
By encouraging these transactions, the plan directly challenges the global payments such as visas and mastercard, which further strengthens India’s homegron payment infrastructure.
How Shopkeepers Benefit from the UPI Incentive Scheme
Under the UPI incentive scheme, shopkeepers benefit from every digital payment made directly through UPI. For example, if a customer pays ₹ 2,000 through UPI, the shopkeeper. Will earn the incentive of 3.
Apart from shopkeepers, banks that process these transactions also benefit from the scheme. The government reimburses 80% of the incentive claimed by banks, paying the remaining 20% when the bank ensures less than 0.75% technical failure rate and maintains an uptime of more than 99.5%. Aquintors Banks, which handle UPI payments, are reimbursed based on the value of Rupe and Bhima -P transactions.
This system not only encourages shopkeepers to adopt digital payments, but also ensures that banks provide a spontaneous and efficient payment infrastructure.
Government’s Digital Payments Target for FY 2025-26
The Government of India is focusing on expanding digital payments across the country with special emphasis on reaching small cities and rural areas. For the financial year 2025-26, the government has set an ambitious target of obtaining 20,000 crore UPI transactions. This goal indicates a cashless economy and the growing shock towards the promotion of UPI and RuPay debit cards.
By encouraging traders to adopt digital payment systems, the objective of the government is to streamline transactions, ensure safe payment and provide immediate transfer to bank accounts without additional fees. The UPI system is designed to be simple, faster and reliable, especially for small businesses, helps India to move completely towards the digital economy.
