Former RBI Governor C Rangarajan said on Monday that UPI merchant transactions above ₹2,000 should not attract GST. He urged the GST Council to exempt these payments. Rangarajan noted that while UPI is a public good, charging for the infrastructure is fair, but taxes should not be added to it.
The new merchant discount rate (MDR) to be imposed on UPI merchant transactions above ₹2,000 should not attract any GST, former Reserve Bank of India Governor C Rangarajan said here on Monday.
Rangarajan was speaking at the launch of ‘Cashless Nation: How UPI Changed Everything’ a book by B Sambamurthy and Santanu Paul chronicling the introduction and evolution of UPI, by here on Monday.
“The moment you levy this charge, it will automatically attract GST, because it is a price paid, and therefore the GST will have to be paid. I would urge that the GST Council must clearly come up and say, GST should not be levied,” he said.
Rangarajan suggested that given that there is a cost involved in operating the UPI infrastructure, the question of whether merchants should be charged for transactions is a legitimate one.
Payment mechanism
“Everybody agrees that this payment mechanism is a public good. That is the idea with which the whole thing started. And so should there be a price on it,” he said.
“I do not agree with the view that because it’s a public good it should not be charged,” he added.
The event also saw the presence of Sundararaman Ramamurthy, MD and CEO of BSE India, who emphasised that UPI has been able to democratise access to the capital markets by making digital payments more accessible. He pointed to the need to further expand digital payments ecosystem into remote areas and underserved communities.
V Kamakoti, Director of IIT Madras, said that beyond scale and democratisation UPI’s success can be attributed to the security.
“The protocol has been very effective, very scalable and at the same time very simple. So any sort of security analysis can be done very easily,” he said.
Soumya Swaminathan, former Chief Scientist, WHO, suggested that efforts should be made to address security concerns in the ecosystem.