The federal government on Saturday clarified that UPI customers won’t face any transaction fees, whereas indicating {that a} Service provider Low cost Fee (MDR), if launched, could be restricted to a restricted set of service provider transactions above a specified threshold. It stated the proposed modification to the Fee and Settlement Programs Act was solely an enabling provision and didn’t quantity to the blanket imposition of fees on UPI transactions.
In an announcement, Finance Ministry stated, “Customers making funds won’t face any transaction fees” and that “all Particular person-to-Particular person transactions will proceed to be freed from cost.” It additional clarified that if MDR is launched, it might apply solely to “a restricted set of service provider transactions, above a sure threshold, at a nominal fee, far decrease than debit or bank card MDRs.”
Finance Ministry additionally sought to clarify that the proposed framework wouldn’t end in a blanket cost on retailers. “The overwhelming majority of the transactions will stay freed from cost for retailers on UPI. MDR, if launched, will solely be threshold primarily based and never blanketly levied to all,” it stated.
The clarification comes amid a political row over the Taxation and Different Legal guidelines (Modification) Invoice, 2026, which proposes to amend Part 10A of the Fee and Settlement Programs Act, 2007. The modification has drawn criticism from Congress chief Jairam Ramesh, who has questioned the removing of the statutory zero-MDR safety and argued that authorities assurances can’t substitute for a authorized safeguard.
Finance Minister Nirmala Sitharaman had earlier hit again at Ramesh, saying MDR, if launched, would apply to retailers and never strange customers. She had additionally rejected the suggestion that UPI customers must pay for transactions.
The Ministry on Saturday stated the choice on whether or not MDR ought to really be launched would come later. “As soon as the Parliament passes the Taxation and Different Legal guidelines (Modification) Invoice, 2026… the ‘UPI and Providers Steering Committee’ headed by NPCI will determine on the MDR, if any,” it stated.
Defending the modification, the Ministry stated it was meant to make sure the long-term sustainability of UPI amid quickly rising transaction volumes and the necessity for continued funding in cybersecurity, fraud prevention and infrastructure. “Reliance on subsidies alone isn’t viable for the following wave of progress,” it stated, arguing {that a} balanced framework was wanted to maintain UPI “strong, inclusive, and future-ready.”
The federal government additionally rejected solutions that exterior strain was behind the proposed modifications, calling such studies “unfounded, fully false and deceptive.” It stated the modification ought to as an alternative be seen within the context of constructing India’s digital funds infrastructure sustainable and aggressive.
Reiterating its place, the Ministry stated, “UPI will stay free for residents” and that there could be “no fees on on a regular basis transactions on residents.” Any future MDR, it stated, could be nominal and restricted to a restricted set of service provider transactions.
UPI processed 2,366 crore transactions value ₹29.9 lakh crore in July 2026 alone, in response to the federal government. The platform can be operational in 11 international nations.
Printed on August 8, 2026
