In a Lok Sabha reply dated 18 August 2025, the Ministry of Finance addressed concerns regarding possible charges on Unified Payments Interface (UPI) transactions. The government clarified that there is no proposal at present to impose transaction charges on UPI payments. The Minister explained that while the National Payments Corporation of India (NPCI) had earlier permitted acquiring banks to levy a Merchant Discount Rate (MDR) of 0.30% through its circular dated 30 August 2019, subsequent legal provisions effectively prohibited such charges. Section 10A of the Payment and Settlement Systems Act, 2007, stipulates that no bank or system provider can levy fees on a payer or beneficiary for electronic payments made through prescribed modes under section 269SU of the Income-tax Act, 1961. Pursuant to this, the Central Board of Direct Taxes (CBDT) issued a notification on 30 December 2019 specifying UPI and RuPay debit cards as prescribed payment modes exempt from such charges.
To sustain the zero-charge model and ensure uninterrupted UPI services, the government implemented an incentive scheme to support ecosystem partners. Over the last four financial years (2021–22 to 2024–25), approximately ₹8,730 crore has been provided as incentive support. The reply highlighted that while the NPCI framework initially allowed MDR, government policy prioritised cost-free digital transactions to promote wider adoption under the Digital India initiative.
Accordingly, there is no assessment underway for introducing UPI transaction charges, and the government has reiterated its commitment to maintaining the current zero-charge regime.
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GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 4111
ANSWERED ON MONDAY, AUGUST 18, 2025/SRAVANA 27, 1947 (SAKA)
TRANSACTION CHARGES ON UPI TRANSACTIONS
4111. SHRI ANAND BHADAURIA:
Will the Minister of FINANCE be pleased to state:
(a) whether the Government/RBI proposes to impose transaction charges on UPI transactions;
(b) if so, the details thereof;
(c) whether the Government has assessed the impact of imposing charges on UPI transactions on Digital India initiatives;
(d) if so, the details thereof; and
(e) if not, the reasons therefor?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
a) to (e) Unified Payment Interface (UPI) transactions are facilitated by National Payment Corporation of India (NPCI). Its circular dated 30.08.2019 had permitted the acquiring banks to charge Merchant Discount Rate (MDR) at 0.30% of the transaction value. However, section 10A of the Payment and Settlement Systems Act 2007, provides that no bank or system provider shall impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under section 269SU of the Income-tax Act, 1961. Accordingly, the Government vide Central Board of Direct Taxes (CBDT) Gazette Notification No.105/2019 dated 30.12.2019, had notified UPI and RuPay debit card as prescribed electronic modes of payment under section 269SU of the Income-tax Act, 1961.
In order to ensure continuity of the UPI services by the ecosystem partners, the Government had implemented the incentive scheme during the last four years i.e. FY 21 – 22 to FY 2024 – 25. During this period, the Government has extended incentive support of approximately ₹ 8730 Crores.
Presently, there is no such proposal to impose transaction charges on UPI.
