Is “Cash Only or Pay Online with GST” Legal in India?
You’ve seen it — shops, restaurants, salons, even clinics saying:
“Cash only” or “GST extra if you pay by UPI/card”.
Is this legal? And what does the law say about GST being charged selectively?
Let’s break it down with tax rules, legal angles, and what you should do as a consumer or business owner.
What Does the Law Say?
- GST Law (Section 33 of CGST Act):
Every GST-registered person must clearly show the tax amount on all invoices — irrespective of payment mode. - Rule 46 of CGST Rules:
Tax invoice must mention:- GSTIN of supplier
- Taxable value
- GST charged
- Place of supply
- Mode of payment is irrelevant for tax liability
- CBDT & RBI guidelines also push for digital payments, especially for transactions over ₹20,000 in business.
Bottom Line:
Charging GST only for UPI/card and waiving it for cash is illegal. Either charge GST for all sales or none (if unregistered). Payment method cannot alter taxability.
Real-World Implications
| Practice | Legal? | Tax Impact |
|---|---|---|
| Charging GST only on UPI/card, not on cash | Illegal | Tax evasion risk, violation of GST norms |
| Not issuing invoice for cash payments | Illegal | No invoice = non-compliance |
| Giving “GST-free” rates for cash transactions | Illegal | Selective billing = liable for penalties |
| Charging extra for UPI/card due to MDR fees | Not allowed | RBI prohibits surcharging digital payments |
What If a Business Says “Cash Only”?
- If GST Registered:
- They must issue GST invoice and charge GST regardless of payment mode.
- Refusal to accept digital payments may violate RBI norms under the PSS Act, 2007.
- If GST Unregistered:
- No GST should be charged at all — not even on UPI.
- Cannot mention “GST extra” on any bill or receipt.
Relevant Legal Provisions
- Section 32 of CGST Act, 2017:
Unregistered persons cannot collect GST. - Section 122 of CGST Act:
Penalty of ₹10,000 or tax amount (whichever is higher) for unauthorised tax collection. - RBI Circular (DPSS.CO.PD.No.1812/02.14.003/2019-20):
No extra charge is allowed for accepting digital payments.
Expert Tip: How to Protect Yourself
- Always ask for a GST invoice.
If denied, take a photo of the rate board and bill, and lodge a complaint via:
https://www.cbic-gst.gov.in - Digital surcharge? Report to RBI.
Use: https://cms.rbi.org.in
What Should Businesses Do?
- Uniform pricing policy: Same price, GST included or excluded — but it must be consistent across payment modes.
- Update billing systems: POS and invoice software should follow Section 33 and Rule 46 of CGST Rules.
- Avoid under-the-table pricing: It may invite notices under Section 73 or 74 (tax evasion).
FAQs
Q1. Can a business offer “discount” for cash payments?
No, if it leads to selective GST evasion or lack of proper invoice.
Q2. Can GST be charged extra only for UPI payments?
Absolutely not. GST is linked to the supply of goods/services, not how the customer pays.
Q3. What if a GST-registered shop refuses to give an invoice?
It’s a punishable offence under GST law. Consumers can complain online or via GST helpline.
Summary
“GST extra on UPI but not on cash” is illegal in India. GST must be charged consistently across all payment modes. Cash-only deals to evade GST violate tax laws and RBI norms.
Final Words
Selective GST billing or encouraging “cash-only” deals is not just unethical — it’s illegal under Indian law. As a business, follow uniform GST practices. As a customer, ask for your rights.