In Brief:
- Lok Sabha amended Section 10A of the Payment and Settlement Systems Act, 2007.
- Lifts the ban on charging fees for UPI and RuPay transactions.
- Government can now specify which payment modes incur fees.
- Leverages small charges to fund digital infrastructure without tax money.
- Specific MDR rates are not yet decided.
The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, which amends Section 10A of the Payment and Settlement Systems Act, 2007, enabling the central government to specify electronic payment modes where banks and service providers can levy charges like Merchant Discount Rate (MDR). This removes the previous statutory exemption that barred imposing fees on UPI and RuPay payments.
While payments via RTGS and NEFT already incur service charges, the government aims to use small levies on consumers and small businesses to build a sustainable revenue model for payment infrastructure without burdening public funds, though RBI Governor Sanjay Malhotra noted that discussing specific MDR rates remains premature until the framework evolves further.
