The new merchant discount rate (MDR) on UPI payments above Rs 2,000 will attract 18% Goods and Services Tax (GST), but eligible merchants can claim input tax credit (ITC) on the tax paid, helping offset the additional cost, tax experts said on Wednesday.
From October 15, merchant payments (P2M) above Rs 2,000 will attract an MDR of 0.4%, subject to an overall cap of Rs 300. A flat concessional MDR of Rs 5 will apply to transactions above Rs 2,000 in specified categories, including railways, telecom services, insurance and fuel.
