The federal government on Saturday clarified that UPI customers won’t face any transaction costs, whereas indicating {that a} Service provider Low cost Price (MDR), if launched, can be restricted to a restricted set of service provider transactions above a specified threshold. It stated the proposed modification to the Cost and Settlement Methods Act was solely an enabling provision and didn’t quantity to the blanket imposition of costs on UPI transactions.
In a press release, Finance Ministry stated, “Customers making funds won’t face any transaction costs” 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 price, far decrease than debit or bank card MDRs.”
Finance Ministry additionally sought to clarify that the proposed framework wouldn’t lead to 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 Cost and Settlement Methods 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 extraordinary 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 supposed 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 is just not viable for the subsequent wave of development,” 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 stories “unfounded, utterly false and deceptive.” It stated the modification ought to as a substitute 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 can be “no costs on on a regular basis transactions on residents.” Any future MDR, it stated, can be nominal and restricted to a restricted set of service provider transactions.
UPI processed 2,366 crore transactions price ₹29.9 lakh crore in July 2026 alone, in line with the federal government. The platform can also be operational in 11 overseas international locations.
Printed on August 8, 2026
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