Daijiworld Media Network - New Delhi
New Delhi, Aug 10: Parliament on Monday approved the Taxation and Other Laws (Amendment) Bill, with Finance Minister Nirmala Sitharaman clarifying that the legislation does not impose any tax or transaction charges on users making payments through the Unified Payments Interface (UPI).
The Bill, which was passed by the Lok Sabha last week, was returned by the Rajya Sabha via a voice vote following a brief discussion and the Finance Minister’s reply.
Speaking in the Upper House, Sitharaman addressed speculation surrounding proposed amendments to Section 10A of the Payment and Settlement Systems Act, explaining that it is merely an enabling provision and does not introduce a Merchant Discount Rate (MDR) charge on consumers at this stage.
"The enabling provision we are bringing in does not impose any tax or transaction charge on UPI users," Sitharaman said, adding that no MDR framework has been finalized.
She further noted that following parliamentary approval, the UPI and Services Steering Committee of the National Payments Corporation of India (NPCI) will deliberate on whether an MDR charge should be introduced.
The clarification comes in the wake of concerns over potential fees on digital transactions. The Finance Ministry had previously issued a statement confirming that person-to-person (P2P) UPI transactions will remain completely free of charge.
If an MDR charge is introduced in the future, officials specified that it would apply solely to a limited set of high-value merchant transactions exceeding a set threshold. The rate would be nominal and significantly lower than current MDR charges on debit or credit card transactions, ensuring that over 90 per cent of daily purchases—such as milk, vegetables, and groceries—remain exempt.
Highlighting India’s success in building the world’s largest real-time interoperable payment system since its launch in 2016, the government reiterated that UPI has remained entirely free for both citizens and merchants since January 2020.