Union Finance Minister Nirmala Sitharaman clarified during parliamentary discussions on The Taxation and Other Laws (Amendment) Bill, 2026 that individual consumers and small merchants will not pay any transaction fees or tax on Unified Payments Interface (UPI) transfers.
Key Takeaways from the Parliamentary Clarification
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Zero Fees for Individual Users:
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Everyday peer-to-peer (P2P) and consumer-to-merchant (P2M) UPI transfers remain completely free of charge.
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“Will consumers pay any UPI charge? No. UPI has remained free for consumers since its launch, and every Indian will continue to make instant digital payments without paying a transaction charge,” the Finance Minister affirmed.
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Full Protection for Small Businesses & Street Vendors:
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Small vendors—including Kirana stores, street vendors, and small business owners—will remain fully exempt from the Merchant Discount Rate (MDR).
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Nature of the Legislative Amendment:
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The amendment to Section 10A of the Payment and Settlement Systems Act, 2007 acts purely as an enabling provision.
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It allows the government statutory flexibility to notify protected zero-charge payment modes, rather than immediately imposing fees.
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Future Scope for Selective MDR:
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If any Merchant Discount Rate (MDR) framework is introduced in the future by the National Payments Corporation of India (NPCI) steering committee, it will strictly target limited categories of high-value merchant transactions above a prescribed threshold.
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Overview of UPI Transaction Charges
| Category | Applicable Charges | Status / Impact |
| Individual Consumers (P2P & P2M) | ₹0 (100% Free) | Statutory protection against transaction fees maintained. |
| Small Merchants & Kirana Stores | ₹0 (Zero MDR) | Completely exempt from MDR to promote inclusive growth. |
| Large Enterprises & High-Value Transactions | Potential nominal MDR | Under review by NPCI for high-value merchant thresholds. |
