Abstract The rapid growth of the Unified Payments Interface (UPI) has transformed the digital payment landscape in India by enabling fast, secure, and cost-effective transactions. In this context, the present study examines UPI users’ responses to the potential imposition of tax on UPI transactions and its impact on their spending behaviour. The study is confined to Mandya District, Karnataka, and is based on primary data collected from 160 respondents through a structured questionnaire using Google forms. The study employs descriptive and analytical research methods, using Chi-square tests and One way ANOVA through SPSS to analyze the relationship between demographic variables and UPI users’ behavior, as well as differences in opinions regarding tax imposition. The findings reveal that demographic factors such as gender, age, occupation, income level, and area of living significantly influence UPI usage patterns and spending behaviour, but do not significantly affect users’ opinions, awareness, or perceptions regarding tax imposition on UPI transactions. The results further indicate a uniform perception across different demographic groups, suggesting that any tax policy on UPI transactions would have a broad and collective impact on users. The study concludes that imposing taxes on UPI transactions may discourage usage, thereby affecting the growth of digital payments. Hence, a cautious and user-friendly policy approach is recommended to sustain the expansion of the digital payment ecosystem in India. Keywords: UPI transactions, digital payments, spending behaviour, tax imposition, demographic analysis, user perception I Introduction "Unified Payments Interface (UPI) provides an opportunity for other countries to learn from the Indian experience and get ideas on how to adopt it in their own countries." (Montes, 2025). This statement provides evidence of the potential of the Indian economy in the transformation of digital India. According to the Ministry of Finance, in FY 2024-25 (till Jan 2025), the P2M transactions contribute 62.35% and P2P transactions contribute 37.65 percent of the overall UPI volume (Montes, 2025). In the context of the current economic situation of India, the UPI system has turned into a revolutionary system and is spreading extensively beyond the domestic borders. Meanwhile, the Government of India released a press note through its official website on 18 April 2025 and gave clarification on the false news of the imposition of tax on UPI transactions. (MoF, 2025). The prime focus of this study is to extract the opinions of UPI users regarding the imposition of tax on UPI transactions, and the secondary objectives of the study are to analyze the average rate of usage of UPI apps, the purpose of using UPI apps, the impact of using UPI apps on spending behaviour, consumers' views towards government initiatives and their satisfaction level towards the services given by the UPI apps. To analyze both primary and secondary objectives, we have used six demographic variables: gender, age, income level, area of living, monthly income, and occupation. 2.Literature Review Previous works highlight several key dimensions influencing the adoption and usage of UPI in India. Security concerns are considered as one of the most key factors affecting consumers’ adoption of UPI systems for transactions. (Bhuvaneshwari, 2021; Vijay Motwani, 2024; Balamurugan, 2024). Several studies revealed that UPI has emerged as the most user-oriented, efficient, and cost effective payment system. (Manisha Tripathi, 2024; Anjum, 2025). However, some researchers found that the increasing reliance on digital payments, including UPI and credit-based instruments. (Mahammad Rafee, 2022). Further UPI shows a right path for other countries to learn from the Indian experience to adopt it in their own countries." (Montes, 2025). Nevertheless, previous studies have not examined the impact of the tax imposition on UPI transactions on the spending behaviour of consumers based on different demographic variables. This study’s main aim is to analyze UPI user’s responses towards tax imposition and its behavioural implications. 3.Methodology The present study adopts a descriptive and analytical research design to examine the spending behaviour of UPI users and their perceptions towards tax imposition on UPI transactions. The study is based on primary data collected from 160 UPI users from heterogeneous demographic backgrounds in Mandya District, Karnataka. A structured questionnaire was provided through Google Forms, and a total of 160 responses were collected using a random sampling method. The sample consists of a heterogeneous group representing various demographic characteristics such as gender, age, educational level, income, occupation, and area of living. Statistical tools like Chi-square test and One-way ANOVA were incorporated using SPSS software. The Chi-square test was used to examine the association between demographic variables and different dimensional behavior of UPI users. While ANOVA test was used to analyze the differences in opinions regarding tax imposition on UPI transactions across demographic groups. 4.Analysis of Demographic variables (Table-1) Gender of the respondent Female 52 32.5 Male 108 67.5 Total 160 100.0 Age Group 18-22 Years 26 16.3 23-27 Years 26 16.3 28-32 Years 15 9.4 33-37 Years 23 14.4 38-42 Years 29 18.1 43-47 Years 24 15.0 48 years above 17 10.6 Total 160 100.0 Area of living Rural 49 30.6 Semi-Urban 27 16.9 Urban 84 52.5 Total 160 100.0 Educational Status Secondary level ( 9th to 10th standard) 7 4.4 Higher secondary level (11th to 12th standard) 6 3.8 Under graduation level 48 30.0 Post graduation level 67 41.9 Professional 32 20.0 Monthly Income level up to Rs.25,000 44 27.5 Rs.25,000-Rs.50,000 31 19.4 Rs. 50,000-Rs.1,00,000 28 17.5 Rs.1,00,000-Rs.1,50,000 18 11.3 Rs.1,50,000-Rs.2,00,000 14 8.8 Rs.2,00,000-Rs.2,50,000 12 7.5 Rs. 2,50,000-Rs.3,00,000 1 .6 Above Rs.3,00,000 12 7.5 Total 160 100.0 Occupation of the respondents Government Employee 56 35.0 Private Employee 34 21.3 Self employed 15 9.4 Contract-based employee in Government sector 10 6.3 Student 32 20.0 Housewife 9 5.6 Others 4 2.5 Total 160 100.0 Demographic Analysis (Table-1) The table-1 clearly reveals that 67.5 percent of the respondents are male, indicating male respondents’ dominancy. The age group is dominated by the working class group, specifically between 33 to 47 years. Most of the responses received from urban areas (52.5 percent), since it is an urban-oriented sample. The table indicates that 41.9 percent of the respondents are post graduates, 30 percent of the respondents are completed under graduation, it reveals that most of the respondents are highly group (below y qualified. Income distribution proclaims that the majority of respondents belong to middle income (below ₹ 1,00,000) Occupational distribution clears that government employees are the major stakeholders( 35 percent), followed by private employees. Overall, the sample is characterized by urban-oriented, educated, male-dominated, and slightly skewed towards urban and middle-income classes. 5.Chi-square test (Table 2.0) Particulars Chi-square test Gender*Reasons for using UPI Apps H0: There is no relationship b/w Gender & reason for using UPI Apps H1:There is a relationship b/w Gender & reason for using UPI Apps Value df Asymp. Sig. (2-sided) Accepted/Rejected Pearson Chi-Square 4.097 5 .536 Accepted Gender* Purpose of using UPI Apps H0: There is no relationship b/w Gender & Purpose of using UPI H1: There is a significant relationship b/w Gender & Purpose of using UPI Value df Asymp. Sig. (2-sided) Rejected Pearson Chi-Square 20.565 7 .004 Gender*Impact on spending behavior of UPI users. H0: There is no relationship b/w Gender & Impact on Spending behaviour H1: There is a relationship b/w Gender & Impact on Spending behaviour Value df Asymp. Sig. (2-sided) Accepted Pearson Chi-Square 6.913 1 .009 Gender* Awareness of tax imposition on UPI transaction transaction H0: There is no relationship b/w Gender & Awareness of tax imposition on UPI H1: There is a relationship b/w Gender &Awareness of tax imposition on UPI Value df Asymp. Sig. (2-sided) Accepted Pearson Chi-Square 1.489 1 .222 Gender*opinions regarding tax imposition on UPI transaction H0: There is no difference of opinions regarding tax imposition on UPI transaction H1: There is a difference of opinions regarding tax imposition on UPI transaction Value df Asymp. Sig. (2-sided) Accepted Pearson Chi Square 0.539 3 .910 Gender*Government Initiatives H0: There is no difference of opinions regarding Government initiatives based on gender H1: There is a difference of opinions regarding Government initiatives based on gender Value df Asymp. Sig. (2-sided) Accepted Pearson Chi Square 0.108 1 .743 Gender*Satisfaction level H0: Satisfaction level is same in both male & female regarding UPI usage H1: Satisfaction level is not same in both male & female regarding U
Jayasheela et al. (Sun,) studied this question.