NPCI Clarifies: Merchants Can Claim ITC on UPI MDR Charges
By Business Desk
NPCI confirms GST-registered merchants can claim Input Tax Credit on UPI MDR fees to offset output tax liabilities and reduce business costs.
Unpacking the Tax Clarification
The National Payments Corporation of India has issued a formal clarification regarding the tax treatment of digital payment costs. NPCI confirmed that merchants are eligible to claim Input Tax Credit on the Merchant Discount Rate fees associated with unified payments interface transactions.
Understanding Eligibility and Offsets
This guidance applies exclusively to merchants who are registered under the Goods and Services Tax framework. By treating the GST paid on MDR as an input tax, businesses can reduce their overall tax burden. Companies achieve this by offsetting these transaction costs directly against their output tax liability.
Financial Clarity for Digital Merchants
This clarification provides financial clarity for merchants utilizing digital payment methods. Businesses can now optimize their tax filings regarding transaction expenses under the established regulatory framework.