- The Lok Sabha has passed the Taxation and other Laws (Amendment) Bill, 2026, which allows for potential fees on UPI transactions.
- Finance Minister Nirmala Sitharaman clarified that the Merchant Discount Rate (MDR) applies to merchants and not to customers, stating that this charge will help banks and fintech invest in infrastructure and security.
- Sitharaman stated that the UPI and Services Steering Committee led by NPCI will decide on the MDR only after the Parliament passes the bill.
- Congress leader Jairam Ramesh alleged that the burden of MDR will fall on ordinary people, claiming the government's assertion that this is the only way to keep UPI financially sustainable is 'entirely wrong'.
- The Taxation and other Laws (Amendment) Bill, 2026 proposes to amend Section 10(A) of the Payment and Settlement Systems Act, 2007, providing legal backing for the government to modify the zero-MDR framework on UPI and RuPay card transactions.
- While the Bill does not introduce an MDR or specify a fee, it creates the legal backing for the government to modify the zero-MDR framework in the future.
- Sitharaman criticized the opposition's protest in Parliament, stating that the bill 'could have been discussed on the floor of the House' if the Congress party had engaged constructively.
The Lok Sabha's recent passage of the Taxation and other Laws (Amendment) Bill, 2026 allows the government to modify the zero-MDR framework for UPI transactions, a move that has sparked debate.
Finance Minister Nirmala Sitharaman emphasized that the Merchant Discount Rate (MDR) will only impact merchants, not end users, stating, "Before spreading a canard, @Jairam_Ramesh ji, please consider this: Merchant Discount Rate (MDR) applies only on the merchants and not on the end users/customers."
Sitharaman argued that the MDR will enable banks and fintech companies to invest in infrastructure, innovation, and security, ultimately benefiting all UPI users. She noted that a committee will determine the MDR after the bill's passage, which has been a point of contention with opposition leaders like Jairam Ramesh, who claimed that ordinary people might bear the costs. Ramesh criticized the government's assertion that this is necessary for UPI's financial sustainability, calling it "entirely wrong."
The bill does not introduce a specific MDR or fee but lays the groundwork for future modifications to the current zero-MDR policy. Sitharaman also pointed out that the ongoing opposition protests have hindered constructive discussions in Parliament regarding the bill.
As the government seeks to enhance the digital payment landscape, the implications of this legislation remain a topic of heated debate among lawmakers and the public.
“The bill amends Section 10(A) of the Payment and Settlement Systems Act, 2007, enabling the government to modify the zero-MDR framework later. Congress's Jairam Ramesh alleges the burden will fall on ordinary people, calling the government's sustainability claim 'entirely wrong'.”
