Lok Sabha Clears Framework for Future UPI Charges
The Lok Sabha has passed legislation that would give the Centre legal authority to permit banks and payment service providers to levy charges on UPI and other notified digital payment modes. However, the passage of the Bill does not introduce any immediate transaction fee for UPI users.
Lok Sabha Clears UPI Charges Framework
The Taxation and Other Laws (Amendment) Bill, 2026, amends the Payment and Settlement Systems Act, 2007, along with other taxation laws.
The amendment removes an existing legal restriction that prevents banks and payment service providers from levying Merchant Discount Rate, or MDR, on notified electronic payment methods such as UPI.
The Bill was passed by voice vote in the Lok Sabha after being moved by Finance Minister Nirmala Sitharaman.
UPI Users Will Not Face Immediate Charges
The change creates a legal framework under which the government can permit charges in the future. It does not automatically impose fees on individual UPI transactions.
The Payments Council of India has clarified that UPI payments will continue to remain free for consumers and small merchants.
Any merchant service charges introduced under the new framework would operate as commercial arrangements between eligible merchants, banks and payment providers rather than automatically becoming charges paid by individual consumers.
Government Opens Door to Future UPI MDR
The government says the framework is intended to create a sustainable revenue model for banks, fintech companies and payment infrastructure providers that incur costs in processing rapidly growing digital transactions.
UPI has expanded into one of India’s most widely used payment systems while operating under a zero-MDR framework for notified transactions.
The Bill must complete the remaining parliamentary and legislative process before the amended provisions become law. Any actual UPI charges would also require subsequent government action specifying how and where such fees can apply.
