UPI, RuPay Debit Card Charges Possible Under New Bill
By Business Desk
India’s proposed Taxation and Other Laws (Amendment) Bill, 2026, could enable future charges on UPI and RuPay debit card transactions, altering the current fee-free status.
The Indian government has introduced the Taxation and Other Laws (Amendment) Bill, 2026, a legislative move that could pave the way for future charges on certain UPI and RuPay debit card transactions. This Bill amends the Payment and Settlement Systems Act, 2007, creating a legal framework for potential Merchant Discount Rate (MDR) levies.
Currently, Section 10A of the existing Act explicitly prohibits any charges on electronic payment modes like BHIM-UPI, UPI QR code, and RuPay debit cards. The proposed amendment seeks to replace this fixed exemption, granting the central government the authority to specify which payment methods will remain charge-free through future notifications.
Addressing Sustainability Concerns
- MDR has been prohibited on UPI and RuPay debit card transactions since January 2020 to foster digital adoption.
- Industry participants and a Parliamentary Standing Committee argue that the absence of MDR renders the UPI ecosystem financially unsustainable.
- Government incentives, while present, cover only a fraction of the actual operational costs, according to industry reports.
It is crucial to understand that the Bill itself does not immediately introduce charges on UPI transactions. Any actual levy of MDR would require a separate notification from the central government, issued only after the Bill is successfully passed into law.
Potential Scope and Consumer Impact
- If MDR is eventually introduced, it is anticipated to initially target large merchants with an annual turnover exceeding Rs 50 crore.
- These specific businesses are already covered under Section 269SU of the Income-tax framework.
- MDR is traditionally charged to merchants, not directly to consumers, and the Bill does not propose any fees for users making UPI payments.
For now, UPI transactions remain free for users. Future policy changes, including any specific turnover thresholds or MDR rates, would be detailed in subsequent government notifications, not within the current Bill.