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What is the story about?
The government expects the introduction of a Merchant Discount Rate (MDR) on some UPI transactions to have a “very minimal” impact on Goods and Services Tax (GST), a government official told CNBC-TV18.
Most UPI payments will remain outside the MDR framework, the official said. GST paid on MDR will also be eligible for input tax credit (ITC), allowing businesses to claim the tax as a set-off against their GST liability.
Under the new framework, a 0.4% MDR will apply from October 15 to eligible person-to-merchant UPI transactions above ₹2,000, subject to a maximum charge of ₹300 per transaction.
The charge will be paid by merchants. Person-to-person transfers and merchant transactions of up to ₹2,000 will remain outside the MDR.
The government will monitor the implementation through payment aggregators to ensure merchants do not pass the charge on to consumers, the official said. The GST Council may also consider pending issues related to MDR.
Capital-market transactions, including payments involving mutual funds, securities, stockbrokers and dealers, will attract a lower MDR of 0.02%, subject to the same ₹300 cap, according to sources. The rate was finalised after discussions with the Securities and Exchange Board of India (SEBI), the government official said.
Most UPI payments will remain outside the MDR framework, the official said. GST paid on MDR will also be eligible for input tax credit (ITC), allowing businesses to claim the tax as a set-off against their GST liability.
Under the new framework, a 0.4% MDR will apply from October 15 to eligible person-to-merchant UPI transactions above ₹2,000, subject to a maximum charge of ₹300 per transaction.
The charge will be paid by merchants. Person-to-person transfers and merchant transactions of up to ₹2,000 will remain outside the MDR.
The government will monitor the implementation through payment aggregators to ensure merchants do not pass the charge on to consumers, the official said. The GST Council may also consider pending issues related to MDR.
Capital-market transactions, including payments involving mutual funds, securities, stockbrokers and dealers, will attract a lower MDR of 0.02%, subject to the same ₹300 cap, according to sources. The rate was finalised after discussions with the Securities and Exchange Board of India (SEBI), the government official said.
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