This story was originally published by NewsMeter, and republished by Probe as part of The Power Collective.
Claim it: From 1 April 2025, UPI transactions above Rs 2,000 will be taxed at 1.1%.
fact: The claim is false. The 1.1% tax applies only to PPI merchant transactions, not bank-to-bank money transfers.
Hyderabad: UPI (Unified Payment Interface) has gradually become one of the most widely used payment options in India. However, a post claiming that such transactions will be taxed at 1.1 percent from April 1, 2025 is going viral.
An X user shared the claim He wrote on social media, “From April 1, if you transfer more than Rs 2,000 through Google Pay, Phone Pay or any other UPI, 1.1 percent tax will be charged. For example, if you send someone Rs 10,000, Rs 110 will be deducted as tax. (Translated from Telugu) (Collection)
The Newsmeter found the claim to be false. The tax is applicable only on PPI merchant transactions above Rs 2,000. Prepaid Payment Instruments (PPIs) are devices that allow customers to store money in a wallet and conduct transactions.
With the viral claim, the user shared a video of a TV9 Telugu bulletin about taxes. In a bulletin, TV9 said the tax will only apply to payments made using wallets and cards. However, we couldn’t find the clip on YouTube for further clarification.
Using a keyword search, we found a report Hindu Published on March 30, 2023, with the title ‘PPI merchant transactions above ₹2,000 to attract 1.1% fee from April 1.’ According to the report, “From April 1, an interchange fee of 1.1% will be levied on business transactions above ₹ 2,000 using prepaid payment instruments (PPI wallets) on the Unified Payments Interface.”
Quoting the National Payments Corporation of India (NPCI), which regulates UPI, the report said the new interchange charges will be applicable only for PPI merchant transactions and there will be no charge for other regular customers.
From the report, we can see that 1.1 percent tax on PPI merchant transactions above Rs 2,000 was implemented from April 1, 2023.
We also found a post PIB fact check shared on March 29, 2023, which addressed the same claim. The post read, “Normal UPI transactions incur no charges. The @NPCI_NPCI circular is about transactions using prepaid payment instruments (PPI) like digital wallets. 99.9% of transactions are not PPI.” (Record)
.@IndiaToday Claims to charge 1.1% on UPI transactions above 2000#PIBFactCheck
➡️Normal UPI transactions are free of charge.➡️@NPCI_NPCI The circular is about transactions using prepaid payment instruments (PPI) such as digital wallets. 99.9% of transactions are not PPI pic.twitter.com/QeOgfwWJuj
— PIB Fact Check (@PIBFactCheck) March 29, 2023
What is the difference between UPI and UPI wallet transactions?
A Money control A report published on October 21, 2024 titled ‘Integrated Payment Interface vs Integrated Payment Interface Wallet: Why Switching to Integrated Payment Interface Wallets for Small Payments is a Smart Move’ elaborates on the differences between the two.
The report said, “UPI is a payment system that allows instant money transfer between two bank accounts through a mobile device using apps like Google Pay, PhonePe, Amazon Pay or Paytm. Unified Payment Interface wallets, on the other hand, are prepaid wallets linked to your UPI apps that store balances and can be used for small transactions without directly accessing your bank account.”
Another report on transactions published by Fi money On August 21, 2024, UPI explained the charges incurred after the transaction.
According to the article, ‘Will you be charged for UPI? To remove confusion, NPCI has clarified that the charges are applicable only on payments made through prepaid wallets such as PhonePe or Paytm wallets, and not for bank-to-bank transfers.”
“The reason for this difference is that pre-paid wallets charge a fee for adding money to the wallet, and NPCI believes that these fees will help offset the cost of this fee,” the report said. The new charges on UPI payments announced by NPCI should not be a cause of concern for the average Unified Payments Interface user as they are applicable only for merchants receiving payments through pre-paid wallets, the report said.
From the above reports, we can see that the 1.1 percent tax is applicable only on PPI merchant transactions above Rs 2,000 and has been implemented from April 1, 2023. This tax will not affect the banking transactions of an average UPI user. From-bank transfer.
Therefore, the newsmeter concludes that the claim is false
Claim Review: From 1 April 2025, UPI transactions above Rs 2,000 will be taxed at 1.1%.
Claimed by: Social media users
Claim reviewed by: newsmeter
Claim Source: Social networking
Claim Fact Check: wrong
Fact: The claim is false. The 1.1% tax applies only to PPI merchant transactions, not bank-to-bank money transfers.
This fact-checking story was originally published by NewsMeter, as part of the Power Collective. Other than the headline, this story has not been edited by The Probe staff.