Page 18 - NIS English 16-30 September, 2026

Cover Story
UPI TURNS 10

New Law Passed by Parliament

In August 2026, both Houses of Parliament approved the ‘Taxation and Other Laws (Amendment)
Bill, 2026,’ which subsequently received the assent of President Droupadi Murmu. A key
component of this Bill involves an amendment to the Payment and Settlement Systems Act, 2007.
This development sparked a nationwide discussion regarding UPI.

Here are the key
highlights of the law,
explained in simple terms:

n This amendment modifies the
Payment and Settlement Systems
Act, 2007; previously, banks and
payment service providers were
barred from levying a Merchant
Discount Rate (MDR) on notified
electronic payment modes like UPI.

n Following the amendment, the
government gains the authority
to issue future notifications n It has been stated that potential charges would apply only to
empowering banks and payment transactions involving certain large and select merchant categories,
service providers to fix service with specific details to be notified separately in the future.
charges for specific categories of n The Bill also encompasses various other taxation-related
merchant transactions. matters, such as facilitating foreign investment, incentivizing

n Finance Minister Nirmala Sitharaman domestic electronics manufacturing, and providing relief in
clarified in Parliament that UPI will the rough diamond trade.
remain completely free for the average n The government states that the objective of this move is
consumer—just as it has been since to strengthen and ensure the sustainability of the payment
its inception—and ordinary citizens ecosystem while maintaining the success of UPI, thereby
will not incur any charges for making ensuring that banks and service providers have the resources
payments via UPI. needed to maintain this vast infrastructure.

THE JOURNEY OF UPI BEGAN IN public on August 25. Few could have imagined that
MUMBAI within the coming decade, this platform would find
April 11, 2016, is a date etched in golden letters in its way into every corner of the country and onto
India’s digital history. It was on this day in Mumbai the mobile phones held in everyone’s hands.
that the then-Governor of the Reserve Bank The National Payments Corporation of India
launched the pilot version of UPI. Initially, it was (NPCI) developed this system under the guidance
merely an experiment limited to a handful of banks of the Reserve Bank. Its most remarkable feat was
and select customers. It opened to the general linking accounts from different banks through

16 NEW INDIA SAMACHAR || Sep 16-30, 2026