UPI MDR and GST Explained

Does GST Apply to UPI MDR?

Yes, where MDR applies, GST at 18% is levied on the MDR amount — not on the full transaction value. This is an important distinction that affects the actual merchant settlement.

GST Calculation Example

For a standard merchant UPI transaction of ₹10,000:

GST on MDR vs GST on Transaction

A common misconception is that GST is charged on the full transaction amount for UPI payments. This is not correct. GST applies only on the MDR amount (the processing fee), not on the transaction itself. So for a ₹10,000 payment, GST is on ₹40 (= ₹7.20), not on ₹10,000.

When Does GST on MDR Apply?

• GST on MDR applies only when MDR itself is applicable
• For zero-MDR transactions (≤ ₹2,000 for standard; P2P; zero-MDR categories), GST is also zero
• For essential sector (₹5 flat MDR), GST = ₹5 × 18% = ₹0.90
• For capital market (₹20 MDR on ₹1 lakh), GST = ₹20 × 18% = ₹3.60

GST on MDR by Category

The GST treatment varies by merchant category:

• Standard merchant, above ₹2,000: GST applies on the 0.4% MDR
• Essential sector, above ₹2,000: GST applies on ₹5 flat MDR
• Capital market: GST applies on 0.02% MDR
• Zero-MDR / P2P: No MDR, so no GST on MDR

Use the UPI MDR + GST calculator to calculate GST on MDR for any transaction.