UPI MDR above Rs 2,000 to attract 18% GST
The Goods and Services Tax (GST) on merchant discount rates (MDR) for UPI payments exceeding Rs 2,000 will be 18%, but eligible merchants can claim input tax credit (ITC) to offset the additional cost. From October 15, merchant payments above Rs 2,000 will attract a new MDR of 0.4%, capped at Rs 300 per transaction. A flat concessional MDR of Rs 5 will apply to certain high-value transactions.
The change aims to generate an estimated Rs 3,500-Rs 4,000 crore in annual GST collections. However, registered merchants can claim ITC on the GST paid, significantly reducing their tax burden. Small vendors and transactions under Rs 2,000 remain exempt from this GST.
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