New Delhi, September 24, 2026 (Yes Punjab News)
The government plans to reach out to traders to address concerns and clear doubts over the Merchant Discount Rate (MDR) that will apply to UPI transactions above Rs 2,000 from October 15, a senior official said on Thursday.
The official said there would be no MDR on UPI transactions up to Rs 2,000, meaning such payments would also have no GST impact arising from MDR. Government data shows that transactions of up to Rs 2,000 account for more than 96 per cent of UPI merchant transaction volumes.
RuPay cardholders will also not be charged under the new framework, the official said, adding that the government has ruled out any reconsideration or extension of the October 15 implementation date.
The Indian Banks Association is also expected to launch full-page advertisements explaining UPI and MDR and clarifying the role of banks in the system.
The official said merchants receiving up to Rs 1 lakh per month through UPI would not be liable to pay MDR and therefore would not face GST on MDR either. He said concerns that GST on MDR would create an additional financial burden for merchants were misplaced.
He further explained that GST paid on MDR can be adjusted against the GST payable on the sale of goods through the input tax credit mechanism. As a result, merchants would not ultimately bear the GST cost on the MDR amount paid by them, he said.
The proposed MDR has particularly drawn attention from petrol pump dealers. The dealers have held discussions with senior Petroleum Ministry officials over concerns that the new charges could affect their commission margins.
Under the new UPI framework, an MDR of Rs 5 per transaction will apply to petrol and diesel purchases above Rs 2,000. Petrol pump owners have estimated that such transactions account for around 30-40 per cent of purchases across retail outlets.
Petroleum Ministry officials have sought to explain that the MDR is intended to support the development of the next layer of India’s UPI digital infrastructure.
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