Lok Sabha Passes Taxation Bill: UPI Fees, Foreign Capital Inflow

The Lok Sabha has passed the Taxation and other Laws (Amendment) Bill, proceeding without a formal debate. This legislative action occurred amidst ongoing Opposition protests regarding various issues that disrupted House proceedings.

The Opposition’s continued demonstrations centered on demands for discussions concerning alleged irregularities related to Ram temple donations and reported police actions against student protesters.

Understanding the New Legislation

This newly passed legislation introduces amendments across several key financial acts. It seeks to modify the Payment and Settlement Systems Act, 2007, the Income-Tax Act, 2025, and the Finance Act, 2026.

The government’s primary objectives with this Bill include:

• Attracting increased foreign capital into the country.
• Promoting domestic manufacturing within the electronics sector.
• Facilitating the use of Indian data centers by foreign cloud companies, ensuring ‘process certainty’.

Changes to Digital Payments

A significant amendment within the Bill pertains to the Payment and Settlement Systems Act. This change grants the government explicit authority to introduce Merchant Discount Rates (MDR) on transactions conducted via UPI and RuPay.

This provision effectively ends the prior mandatory zero-fee era for these digital payment methods. The introduction of MDR could alter the operational landscape for merchants and payment service providers.

Rajya Sabha’s Parallel Action

Concurrently, the Rajya Sabha has also cleared the Appropriation Bill. This separate legislative measure seeks Parliament’s necessary approval for expenditures that exceeded the initial budget estimates during the financial year 2022-23.