UPI Charges Above ₹2,000? Sitharaman Clarifies Proposed Fee Will Hit Only Large Merchants, Not Users

New Delhi: The Finance Ministry has introduced the Taxation and Other Laws (Amendment) Bill, 2026, in Parliament, proposing to enable a Merchant Discount Rate (MDR) on UPI transactions exceeding ₹2,000 — a move that has stirred political debate over whether digital payments will stop being free.

Responding to criticism from Congress leader Jairam Ramesh, Finance Minister Nirmala Sitharaman clarified on social media that any such levy, if introduced, would apply only to merchants and not to customers making UPI payments. She said the opposition was spreading misinformation about the proposal.

According to government sources, the fee under discussion — likely in the range of 0.25 to 0.4 per cent — is intended to apply only to large merchants and businesses above a prescribed annual turnover, including major e-commerce platforms. Small-value transactions and person-to-person UPI transfers are expected to remain exempt.

A final decision on implementing MDR rests with the UPI and Services Steering Committee chaired by the National Payments Corporation of India, and will only follow passage of the bill amending Section 10A of the Payment and Settlement Systems Act, 2007. Officials estimate roughly 95 per cent of UPI transactions would remain unaffected even if the proposal goes through.