Parliament Clears Taxation Bill; FM Re-assures No MDR On P2P UPI Payments

The Taxation and Other Laws (Amendment) Bill, 2026 cleared the Indian Parliament, paving the way for a potential merchant discount rate (MDR) on certain UPI payments. Finance Minister Nirmala Sitharaman reassured Parliament and the public that end-customers will not be charged a separate fee on UPI transactions. The bill amends Section 10A of the Payment and Settlement Systems Act, 2007, enabling the government to designate electronic payment modes that remain exempt from charges through notification.

Sitharaman clarified that no MDR framework has been finalized yet and that MDR is presently being considered by the UPI and Services Steering Committee, which includes the National Payments Corporation of India (NPCI). The government is reportedly contemplating an MDR of 0.05% to 0.07% on UPI transactions exceeding ₹2,000 for merchants with an annual turnover between ₹1 Cr and ₹1.5 Cr.

Meanwhile, P2P transactions are expected to remain exempt from the proposed MDR. Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that discussions on the fee are still premature, and "someone" will ultimately bear the cost of transactions.