Amidst the confusions on the levy of Goods and Services Tax on the services relating to Unified Payments Interface (UPI), the Ministry of Finance has clarified that no levy is imposed on such charges.
The Ministry took its official twitter handle to clarify that “UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means.”
“The Govt had provided financial support for Digital Payment ecosystem last year and has announced the same this year as well to encourage further adoption of Digital Payments and promotion of payment platforms that are economical and user-friendly,” the Ministry added.
UPI is an instant real-time payment system developed by National Payments Corporation of India. The interface facilitates inter-bank peer-to-peer and person-to-merchant transactions. UPI is an open-source application programming interface that runs on top of Immediate Payment Service.
This is in the light of recent developments where RBI submitted its report titled “Discussion Paper on Charges in Payment System,” implies that the bank is thinking about adding fees to each financial transaction made through the UPI system. The move aims at assessing the possibility of recovering the cost of building and running the UPI infrastructure. According to the RBI, fund transfers made through UPI are equivalent to those made through IMPS (Instant Payment Service), so theoretically, UPI should charge the same fee as IMPS.
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