UPI Payments To No Longer Be Free? What New Tax Bill Says About Payment Charges, MDR And Foreign Investors
- FM assures UPI transactions remain free for consumers.
- Small merchants exempt from MDR charges on UPI.
- New bill includes tax reforms for investment.
Parliament has passed the Taxation and Other Laws (Amendment) Bill, 2026, has raised fresh questions over whether UPI transactions could attract charges. Finance Minister Nirmala Sitharaman, however, clarified that the legislation does not impose any tax or transaction fee on UPI users, and assured that digital payments will continue to remain free for consumers.
Sitharaman said UPI has remained free for consumers since its launch and will continue to remain so.
“Will consumer pay any UPI charge - No," she said, adding that every Indian would continue to use the instant digital payment system without paying a transaction charge.
What does the Bill say about UPI?
Finance Minister Nirmala Sitharaman assured consumers and small merchants that they would not have to pay Merchant Discount Rate (MDR) charges on UPI transactions while passing the Taxation and Other Laws (Amendment) Bill, 2026.
Sitharaman said the UPI-related amendment is only an enabling provision and does not itself impose any tax or transaction charge on users.
"The enabling provision that we are bringing in today does not impose any tax or transaction charge on UPI users," Sitharaman said, adding that it enables the government to specify through notification the electronic payment modes that will continue to receive statutory protection against charges.
