Lok Sabha Passes Bill Empowering Government to Levy Charges on UPI Transactions

Key facts

• The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, which amends the Payment and Settlement Systems Act, 2007.
• The bill empowers the central government to notify electronic payment modes, including UPI, that may attract charges.
• The amendment removes the legal barrier under Section 10A that prevented banks from levying Merchant Discount Rate (MDR) on UPI and other notified digital payments.
• The bill does not immediately impose charges; any charges will be introduced only through a separate government notification.
• Finance Minister Nirmala Sitharaman moved the bill, which was passed by voice vote without discussion amid disruptions.
• The bill also amends the Income Tax Act, 2025, and the Finance Act, 2026.
• Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that the cost of payment infrastructure must be borne either by taxpayers or through MDR under the 'user pays' model.