New Delhi, August 10: The Rajya Sabha approved the Taxation and Other Laws (Amendment) Bill, 2026, on Monday. During the session, Finance Minister Nirmala Sitharaman clarified that users making payments through the Unified Payments Interface (UPI) will not incur any tax or transaction fees under this law.
The bill, which was passed by the Lok Sabha last week, was approved by the Rajya Sabha after a brief discussion and the Finance Minister’s response.
Speaking in the upper house, the Finance Minister stated that the proposed amendment to Section 10A of the Payment and Settlement Systems Act is merely an enabling provision and does not impose any Merchant Discount Rate (MDR) charges on consumers.
Sitharaman emphasized, “The provisions we are bringing do not impose any tax or transaction fees on UPI users.”
She further mentioned that following parliamentary approval, the National Payments Corporation of India’s UPI and Service Operations Committee will consider whether to implement MDR charges.
She clarified, “So far, no framework for the Merchant Discount Rate has been finalized.”
This clarification comes amid rising speculation that transaction fees would be levied on UPI payments following the government’s proposed amendments.
On Saturday, the Finance Ministry issued a statement confirming that person-to-person UPI transactions would remain fee-free as before under the new proposal.
The government stated that if MDR is implemented, it will only apply to a limited number of merchant transactions exceeding a certain threshold, and a nominal fee will be charged. The government assured that this rate would be significantly lower than the MDR applicable to debit or credit card transactions.
The ministry added, “Most transactions for merchants on UPI will remain fee-free.”
Government officials noted that over 90% of transactions, including daily purchases of milk, vegetables, and groceries, will not incur MDR charges.
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