Daijiworld Media Network - New Delhi

New Delhi, Jul 27: The Central government has firmly clarified that there are no plans to impose Goods and Services Tax (GST) on UPI transactions exceeding Rs 2,000, countering recent concerns triggered by tax notices reportedly sent to small traders in Karnataka.

Responding to a query in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary stated:

“There is no recommendation from the GST Council regarding levying GST on UPI transactions above Rs 2,000.”

The clarification comes in the wake of reports that several small businesses in Karnataka received GST demand notices linked to their UPI-based transactions — sparking confusion and backlash among local traders.

The controversy took a political turn when Karnataka Deputy Chief Minister D.K. Shivakumar denied any role of the state government in the issuance of these notices. However, Union Minister Pralhad Joshi hit back sharply, calling Shivakumar’s remarks “utterly ridiculous.”

“It is Karnataka’s own Commercial Tax Department that issued the GST notices. Blaming the Centre is just an attempt to dodge accountability,” Joshi said.

He further pointed out that if the Central government were behind the move, similar notices would have been issued across multiple states, not just Karnataka. “Why are these notices appearing only in one state?” he asked, questioning the state government’s attempt to shift responsibility.

Joshi also explained the dual nature of GST, which includes CGST (Central GST) and SGST (State GST) components. The notices in question, he emphasized, were issued under the SGST domain by the state tax authorities.

As UPI continues to be a cornerstone of India’s digital payment infrastructure, the clarification offers relief to users and small traders alike. The government’s reiteration signals that digital payments will continue to remain tax-free at the transaction level, upholding the push for a cashless economy.