Most UPI transactions to stay free: FM Nirmala Sitharaman

New Delhi: Finance minister Nirmala Sitharaman on Monday assured consumers that UPI (unified payment interface) transactions will remain free, saying the Taxation and Other Laws (Amendment) Bill does not propose any tax or transaction charge on UPI.

She said the majority of low value transactions will continue to remain free and the future merchant discount rate (MDR), if at all, will apply only to a limited category of transaction above a prescribed threshold.

She added that once the Bill is passed by Parliament, the UPI services steering committee headed by National Payments Corporation of India (NPCI) will consider and decide whether any MDR should be introduced and if so, the scope and structure.


Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026, on Monday, with the Rajya Sabha clearing it by voice vote after a brief discussion and the Finance Minister's reply. The Lok Sabha had passed the Bill last week.

"Will consumers pay any UPI charge? No," Sitharaman said in the Rajya Sabha, adding, "UPI has remained free for consumers since its launch and every Indian will continue to make this instant digital without paying any transaction charge," Sitharaman said in her reply to the debate on Taxation and Other Laws (Amendment) Bill, 2026.

The finance minister said small businesses and financial inclusion remain central to the government and consumers will not have to pay on ordinary low value transactions.

She added that UPI is now accepted in 11 countries and in July alone the government processed 2,366 crore UPI transactions worth ₹29.9 lakh.

The legislation, however, gives the Centre legal backing to modify the existing zero-MDR framework governing UPI and RuPay transactions. It removes the linkage between the Payment and Settlement Systems Act and the Income Tax Act.

At present, banks and payment system providers cannot directly or indirectly charge users for payments made through UPI and RuPay debit cards. The Bill proposes allowing the central government to decide, through notification, "which electronic payment modes or transactions must remain free".

Last week, Sitharaman offered clarification on social media after congress party leader Jairam Ramesh triggered concerns over a possible levy on digital payments.

Tax certainty

The Bill also seeks to attract more foreign capital, promote domestic electronics manufacturing through tax incentive till 2041, incentive for rough diamond trading and make it easier for foreign cloud companies to use Indian data centres by providing "process certainty".

The Bill replaces the June 5 ordinance that provided income-tax exemption to interest income and capital gains made by foreign portfolio investors from investments in government securities.

The Bill also seeks to simplify the process for fund managers to relocate to India by cutting down the list of conditions such funds must satisfy to ensure their global income does not get taxed in India.