Quick Summary
The Lok Sabha on Thursday passed the Taxation and Other Laws (Amendment) Bill, 2026, paving the way for the government to potentially allow banks and payment service providers to levy charges on transactions made through Unified Payments Interface (UPI) and other notified electronic payment modes. The Bill, introduced by Finance Minister Nirmala Sitharaman, was passed by voice vote amid disruptions in the House. Among its key provisions is an amendment to the Payment and Settlement Systems (PSS
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FAQ :
No, the passage of the Bill does not automatically impose charges on UPI transactions. Any decision to levy charges would require a separate government notification.
It is a bill passed by the Lok Sabha that amends the Payment and Settlement Systems (PSS) Act, 2007, and other tax laws, potentially enabling charges on digital payment modes like UPI.
MDR is a fee paid by merchants to banks and payment service providers for processing digital transactions. This debate has resurfaced with the new bill.
Industry stakeholders argue that substantial investment is needed to maintain and expand the digital payments infrastructure, and a sustainable revenue model is required to fund innovation, security, and operational costs.
Market observers believe that if charges are introduced, they are more likely to apply to high-value merchant transactions rather than person-to-person transfers, though no formal proposal has been announced.
The amendment provides the government with the flexibility to revisit the economics of digital payments and potentially introduce charges on specific digital payment modes in the future.
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