UPI MDR & GST Framework: P2P transfers are 100% free. On commercial merchant (P2M) payments above ₹2,000, standard 0.4% MDR applies (capped at ₹300). Banking services attract an additional 18% GST on the MDR amount (which registered merchants can claim as Input Tax Credit / ITC).
Total Merchant Deduction (MDR + GST)
₹0.00
Calculating charges...
| Transaction Type | Person-to-Merchant (P2M) |
| Transaction Value | ₹0.00 |
| Base MDR (0.4%) | ₹0.00 |
| GST on MDR (18%) | ₹0.00 |
| MDR Capping Applied? | No |
| Net Merchant Settlement | ₹0.00 |
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How 18% GST Applies on UPI MDR
Under India's indirect tax framework, Merchant Discount Rate (MDR) is classified as a banking and payment processing service provided by acquiring banks and payment aggregator apps to the merchant:
- GST is NOT on Transaction Value: 18% GST is applied solely on the bank commission (the MDR fee), not on the customer's total payment. For example, on a ₹10,000 transaction, the 0.4% MDR is ₹40, and 18% GST on ₹40 is ₹7.20.
- P2P & Micro-Transactions (≤ ₹2,000): Because the base MDR is zero, the GST also remains ₹0.
- High-Value Cap with GST: On purchases of ₹75,000 and above where MDR is capped at ₹300, the GST component is ₹54 (18% of ₹300), bringing the maximum total deduction to ₹354.
- Input Tax Credit (ITC): GST-registered merchants can claim the 18% GST paid on bank MDR invoices as an input credit against their output tax liability.
Comprehensive UPI MDR & GST Slab Card
| Payment Value | Base MDR (0.4%) | 18% GST on MDR | Total Deduction |
|---|---|---|---|
| Up to ₹2,000 | ₹0 (Exempt) | ₹0 | ₹0 (Zero Charge) |
| ₹5,000 | ₹20.00 | ₹3.60 | ₹23.60 |
| ₹10,000 | ₹40.00 | ₹7.20 | ₹47.20 |
| ₹50,000 | ₹200.00 | ₹36.00 | ₹236.00 |
| ₹75,000 and above | ₹300.00 (Capped) | ₹54.00 | ₹354.00 (Maximum Cap) |