Page 40 - NIS English 01-15 September, 2026

NATION | UPI is free

UPI services

To Remain Free...

The Government of India has taken several significant steps to make digital
payments more robust and transparent. With the passing of the Taxation and Other
Laws (Amendment) Bill, 2026, the framework regarding UPI-related charges has
become clear. UPI services will continue to be completely free for general consumers
and person-to-person (P2P) transactions. Finance Minister Nirmala Sitharaman
clarified that the Merchant Discount Rate (MDR) on digital transactions applies to
merchants, not customers. MDR charges will assist banks and fintech companies in
investing more in infrastructure and security...

arliament has passed the Taxation and Other Laws
P(Amendment) Bill, 2026. In Parliament, Finance Minister The Government of India
Nirmala Sitharaman clarified that this legislation does not has explicitly announced
impose any tax on UPI and that the digital payment system that…
will remain free for consumers. She further stated that the
amendment concerning UPI is merely a necessary provision n Free for users: Paying consumers
and does not, in itself, levy any tax or transaction charge on will not be charged any fees for
users. The government has clarified that there is no intention transactions.
to impose MDR on small merchants, as they are essential for n Free P2P transactions: All person-to-
the inclusive growth of UPI. person transactions will remain free.

n Nominal MDR for merchants: If
Key facts about UPI… an MDR (Merchant Discount Rate)

n Since its launch in 2016- charge is applied, it will be at a nominal
17, the Unified Payments rate—significantly lower than that for
Interface (UPI) has debit or credit cards—and will apply
transformed India's digital only to a limited number of merchant
economy into one of the transactions exceeding a certain
world's most inclusive and threshold.
dynamic payment systems.
n Most merchant transactions via UPI
n UPI is the world's fastest- will remain free. Small shopkeepers and
growing payment system; in kirana stores do not have to pay MDR
July 2026 alone, 2,366 crore for accepting UPI payments.
transactions worth ₹29.9 lakh
crore were recorded. n Following the passage of the Taxation
and Other Laws (Amendment) Bill,
n UPI is now linked with and
accepted in 12 countries. The 2026 by Parliament—which proposes
government is continuously an amendment to Section 10A of the
promoting UPI at the Payment and Settlement Systems Act,
international level. 2007—the "UPI and Service Operations
Committee," chaired by the NPCI, will
decide on the MDR (if applicable). n

38 NEW INDIA SAMACHAR || Sep 01-15, 2026