Finance Minister introduces Taxation and Other Laws (Amendment) Bill, 2026 to allow MDR on UPI and RuPay debit card payments

Key facts

• Finance Minister Nirmala Sitharaman introduced The Taxation and Other Laws (Amendment) Bill, 2026 in Parliament.
• The bill proposes changes to the Payment and Settlement Systems Act, 2007 to allow banks and payment system providers to charge fees on UPI and RuPay debit card payments.
• Possible MDR for UPI transactions is estimated at 0.3-0.6% for merchants with annual turnover over Rs 50 crore, according to Decentro's Sridhar Guntuku.
• Another estimate suggests MDR of 0.05-0.07% for merchants with annual turnover of at least Rs 1-1.5 crore, according to Zeta's Mehul Mistry.
• Only 4% of person-to-merchant UPI payments in 2025-26 were above Rs 2,000, but they accounted for about two-thirds of UPI payments by value.
• The government's existing incentive scheme for small merchants caps subsidy at 0.15% of transaction value.
• Industry estimates suggest annual cost of operating UPI and RuPay debit card infrastructure could be at least Rs 10,000 crore, possibly up to Rs 20,000 crore.
• A LocalCircles poll found only 12% would continue using UPI if a fee is levied on payments above Rs 3,000 at large merchants, and only 2% if merchants pass on the fee.