Amid widespread dialogue about transaction charges and service provider costs, the federal government on Saturday clarified that UPI will stay free for customers and that small retailers won’t incur costs for accepting digital funds. In actual fact, the MDR (Service provider Low cost Price) costs will likely be relevant for a number of units of service provider transactions
What did the federal government say?
“As and when MDR costs are launched, they may apply solely to a restricted set of service provider transactions above a sure threshold, at a nominal charge far decrease than debit or bank card MDRs,” the federal government mentioned in a launch
The overwhelming majority of the transactions will stay freed from cost for retailers on UPI. MDR, if launched, will likely be threshold-based and never levied blanketly on all, it provides.
“As soon as the Parliament passes the Taxation and Different Legal guidelines (Modification) Invoice, 2026, which proposes to amend Part 10A of the Fee and Settlement Programs Act, 2007, the UPI and Providers Steering Committee headed by NPCI will determine on the MDR, if any,” the federal government additional clarifies.
Key issues to know:
- No costs will likely be levied for utilizing UPI
- P2P transactions will stay free
- Small retailers won’t incur costs for accepting digital funds
- It should apply solely to a restricted set of service provider transactions, above a sure threshold, at a nominal charge
This clarification comes after the passage of the Taxation and Different Legal guidelines (Modification) Invoice, 2026, within the Lok Sabha. The laws, moved by Finance Minister Nirmala Sitharaman and handed by voice vote with out dialogue, seeks to amend the Fee and Settlement Programs Act, 2007, the Revenue-tax Act, 2025, and the Finance Act, 2026.
The invoice empowers the federal government to levy an MDR on choose digital cost modes, with a possible MDR of 0.25 per cent to 0.4 per cent on business-directed UPI transactions above ₹2,000, whereas leaving person-to-person funds unaffected.
The current change has sparked debate, with some individuals believing that it means customers must pay costs for UPI. In actuality, the modification goals to make UPI extra sustainable, technologically superior, and higher ready for future dangers.
“India now stands on the cusp of the following wave of digital funds development. To additional develop UPI into rural and semi-urban areas and preserve competitiveness, the UPI ecosystem have to be self-sustainable and inexpensive. The modification to the PSS Act is a forward-looking step to make sure that UPI continues to thrive as a safe, inexpensive, inclusive, and globally recognised cost system.”
