GENERAL16 Sept 2026
UPI MDR above ₹2,000 may attract 18% GST; merchants can claim ITC
From October 15, UPI payments to merchants above ₹2,000 will carry a 0.4% merchant discount rate (MDR), capped at ₹300, and 18% GST applies on that fee, not on your sale value. Registered merchants can claim input tax credit (ITC) to offset it. Payments under ₹2,000 and small vendors stay exempt. Check your GST records so you can claim ITC properly.
Key Statutory Highlights
- From October 15, UPI merchant payments above ₹2,000 will attract a 0.4% MDR, with an overall cap of ₹300.
- An 18% GST applies strictly to that merchant fee, and not to the core transaction value.
- GST-registered merchants can claim input tax credit, while transactions under ₹2,000 and small vendors remain exempt.
Actionable Advice for Taxpayers / Founders:If you accept UPI payments above ₹2,000, keep clean records of the MDR charged and the GST billed, and check with your tax advisor about claiming input tax credit where you are registered.
Statutory Disclaimer: TaxQue Shorts are AI-assisted editorial briefs for compliance awareness. This brief has not passed every source check; confirm the original notification before acting. This does not constitute formal legal or CA counsel.
TaxQue News Desk
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