UPI charge is just tax collection: Ashneer Grover calls out government wanting to charge on payments above Rs 2,000 while banks are making crores in profits

Any charge on UPI is tax collection: Ashneer Grover says government charging small shopkeepers for using UPI hailed as India's biggest scientific achievement for tax

BharatPe co-founder Ashneer Grover has criticised the possibility of charges being imposed on UPI transactions above Rs 2,000, saying any such levy would amount to nothing but tax collection. His comments came days after the government notified that UPI payments up to Rs 2,000 and RuPay debit card transactions cannot be charged, while leaving the position on larger transactions unclear.

Grover shared his views in a post on X, asking what exact subsidy the government provides on UPI that would now need to be recovered through a new charge. He also weighed the cost of running India's ATM and cash network against the case for UPI, and pointed to the financial strength of the Reserve Bank of India, listed banks and the National Payments Corporation of India to argue that nobody is actually losing money because of UPI.


Ashneer Grover calls it tax collection, not a service fee

Grover said in his post, "Any levy on UPI is just tax collection. UPI is the one scientific achievement of India everyone acknowledges par ab tax ki bali chadhegi."

He argued that UPI already works well for the country on its own, and that dressing up a new charge as a service fee does not change what it actually is.

What the government notification on UPI charges says

According to a gazette notification dated September 14, no bank or payment system provider can impose any charge, directly or indirectly, on a person making or receiving a payment through UPI transactions of up to Rs 2,000 or through RuPay debit cards.

The notification does not clarify whether banks or payment firms will be allowed to charge on UPI transactions above Rs 2,000, particularly those paid by merchants. So far, UPI transactions have never attracted a Merchant Discount Rate, regardless of the transaction amount.

Why Ashneer Grover wants ATMs shut and UPI promoted instead

Grover put the annual cost of running ATMs and cash logistics in India at around Rs 30,500 crore, and said that if the goal is to cut costs, the government should shut ATMs and promote UPI instead.

He also cited the RBI's surplus transfer to the government of Rs 2.87 lakh crore, total profits of listed banks at Rs 4.11 lakh crore, and NPCI's pre-tax surplus of Rs 1,888 crore, asking whose loss is actually happening because of UPI and what subsidy on it is causing any strain.

Law change that opened the door for UPI charges

The notification follows an amendment to Section 10A of the Payment and Settlement Systems Act, 2007, passed by Parliament during the Monsoon Session that ended on August 13, 2026. The amendment creates a framework that allows an MDR to be imposed on UPI and other notified electronic payment modes.

Following the passage of the amendment, the government said a UPI and Services Steering Committee, headed by NPCI, will decide the actual MDR rates going forward.

How big UPI has grown since launch

UPI is run by the National Payments Corporation of India, an initiative of the RBI and the Indian Banks' Association. Since its launch on August 25, 2016, UPI's transaction value has grown from Rs 0.07 lakh crore in FY17 to around Rs 314 lakh crore in FY26, an increase of more than 4,000 times in under a decade.

The system has also expanded beyond India and is now accepted in 11 countries, including Singapore, the UAE, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia and Greece, with Uzbekistan the most recent addition, even as the debate over charging users and merchants at home continues.