Will UPI Transactions Be Charged? Nirmala Sitharaman Explains MDR Rule

Finance Minister Nirmala Sitharaman on Thursday clarified that the Merchant Discount Rate (MDR) on digital transactions applies only to merchants and not to customers, countering Congress leader Jairam Ramesh's claim that ordinary people may have to pay for using UPI.

Responding to Ramesh's remarks on X, Sitharaman said MDR would help banks and fintech firms invest more in infrastructure, innovation and security while ensuring UPI users continue to benefit from improved digital payment services.

She also clarified that the UPI and Services Steering Committee headed by the National Payments Corporation of India (NPCI) has not yet taken any decision on MDR. According to the minister, any such decision can only be considered after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026. Lok Sabha Passes Bill Enabling Government To Allow Charges on UPI and Other Digital Payments.

Nirmala Sitharaman Clarifies MDR

What Does the Taxation and Other Laws (Amendment) Bill, 2026 Propose?

The proposed legislation seeks to amend Section 10(A) of the Payment and Settlement Systems Act, 2007. If passed, it would empower the central government to notify which electronic payment modes or transactions will continue to remain free. What Are Benefits of Taxation and Other Laws 'Amendment' Bill 2026 For UPI? Know All About Proposed Overhaul.

The Bill does not introduce an MDR on UPI or RuPay transactions nor does it prescribe any fee. Instead, it provides the legal framework that would allow the government to modify the existing zero-MDR policy in the future through a notification.

Why Did Sitharaman Criticise Jairam Ramesh?

Jairam Ramesh had alleged that the burden of MDR would ultimately fall on ordinary people and argued that the government's claim that it was necessary for the financial sustainability of UPI was incorrect.

Rejecting the allegation, Sitharaman said, "Merchant Discount Rate (MDR) applies only on the merchants and not on the end users/customers. It will support the Banks & Fintech to invest more on infrastructure, innovation & security. All users of UPI will reap the benefits of this investment."

She also criticised the Opposition for disrupting Parliament during the Monsoon Session, saying the Bill could have been discussed if the Congress had engaged constructively during the proceedings.

(The above story first appeared on LatestLY on Aug 07, 2026 09:17 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).