Should GST be imposed on MDR?

“Since currently no MDR is charged on UPI transactions, there is consequently no GST.” With these words, the Central Board of Indirect Taxes and Customs (CBIC) put to rest, in April 2025, rumours that UPI payments above ₹2,000 would be taxed. From 15 October 2026, merchants will pay a Merchant Discount Rate (MDR) of 0.4 per cent on person-to-merchant UPI payments above ₹2,000, capped at ₹300, with a flat ₹5 for categories such as railways, telecom, fuel and insurance. Where there is MDR, there is GST at 18 per cent. The law plainly permits the levy. The question is whether it should be imposed