Stories
No Extension for UPI MDR October 15 Deadline; GST Council May Review 18% GST
- •The government will not extend the October 15 implementation date for Merchant Discount Rate (MDR) on select UPI transactions.
- •The GST Council may review the 18 percent Goods and Services Tax (GST) levied on MDR, though it's not on the October 7 meeting agenda.
- •A 0.4 percent MDR has been introduced on specified UPI merchant transactions above Rs 2,000, capped at Rs 300 per transaction.
- •Consumers will not be charged for UPI payments, and person-to-person transactions remain free.
- •The government defends MDR as necessary for a sustainable revenue mechanism to support the expanding UPI ecosystem, with rates decided by the Indian Banks' Association (IBA).
Key Questions Answered
Starting October 15, a 0.4 percent Merchant Discount Rate (MDR) is introduced on specified UPI merchant transactions above Rs 2,000, subject to a cap of Rs 300 per transaction. Additionally, a flat concessional MDR rate of Rs 5 applies to specific categories like railways, telecom, insurance, and fuel. Consumers will not be charged, and person-to-person transactions remain free.
While the issue is not currently on the agenda for the October 7 meeting, government sources confirmed that the GST Council may review the 18 percent Goods and Services Tax (GST) levied on MDR. The finance ministry and government are inclined to take a favorable view and discuss ways to provide relief for small businesses.
Businesses with an annual turnover below Rs 40 lakh for goods or Rs 20 lakh for services generally do not need to register for GST. Because they are unregistered, they cannot claim input tax credit (ITC) to offset the 18 percent GST charged on MDR for high-value UPI transactions, which may drastically affect them.
