New Delhi, August 10, 2026 (Yes Punjab News)
Parliament on Monday passed the Taxation and Other Laws (Amendment) Bill, with Finance Minister Nirmala Sitharaman clarifying that the legislation does not impose any tax or transaction fee on people making payments through the Unified Payments Interface (UPI).
The Bill, passed by the Lok Sabha last week, was returned by the Rajya Sabha after a brief discussion and the Finance Minister’s reply before being approved through a voice vote.
Responding to concerns over a possible UPI transaction charge, Sitharaman said the amendment to Section 10A of the Payment and Settlement Systems Act was only an enabling provision and did not introduce a Merchant Discount Rate (MDR) for consumers.
“The enabling provision we are bringing in does not impose any tax or transaction charge on UPI users,” she told the Rajya Sabha.
She said that following Parliament’s approval, the UPI and Services Steering Committee of the National Payments Corporation of India (NPCI) would consider whether an MDR framework should be introduced.
“So, no MDR framework has been finalised,” Sitharaman said.
The clarification follows speculation that the proposed amendments could result in charges being levied on UPI transactions. The Finance Ministry had also said on Saturday that person-to-person UPI payments would continue to remain free.
According to the government, if MDR is eventually introduced, it would apply only to a limited category of merchant transactions exceeding a specified threshold. The charge would be nominal and significantly lower than the MDR applicable to debit and credit card transactions.
The government said most merchant transactions on UPI would continue to remain free, with officials estimating that more than 90 per cent of transactions, including routine purchases of milk, vegetables and groceries, would not attract MDR.
UPI was introduced in 2016 and has remained free for merchants and consumers since January 2020. The government has also highlighted India’s development of UPI into the world’s largest real-time interoperable payment system.
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