Rajya Sabha Passes Taxation and Other Laws Amendment Bill, 2026; Finance Minister Confirms No Charges on UPI Transactions

New Delhi, August 10: The Rajya Sabha approved the Taxation and Other Laws Amendment Bill, 2026, on Monday. During this session, Finance Minister Nirmala Sitharaman clarified that users making payments through the Unified Payments Interface (UPI) will not incur any taxes or transaction fees under this law.

This bill, which was passed by the Lok Sabha last week, was approved in the Rajya Sabha through a voice vote after a brief discussion and the Finance Minister’s response.

While addressing the upper house, the Finance Minister stated that the proposed amendment to Section 10A of the Payment and Settlement Systems Act is merely an enabling provision and does not impose a Merchant Discount Rate (MDR) charge on consumers.

Sitharaman emphasized, “The provisions we are introducing do not impose any tax or transaction fee on UPI users.”

She further mentioned that after parliamentary approval, the National Payments Corporation of India (NPCI) and the UPI Service Operations Committee will consider whether to implement the Merchant Discount Rate fee.

She clarified, “So far, no framework for the Merchant Discount Rate has been finalized.”

This clarification comes amid rising speculation that transaction fees would be levied on UPI payments following the government’s proposed amendments.

On Saturday, the Finance Ministry issued a statement confirming that person-to-person UPI transactions would remain free of charge under the new proposal.

The government stated that if the Merchant Discount Rate is implemented, it would apply only to a limited number of merchant transactions exceeding a certain threshold, and a nominal fee would be charged. They assured that this rate would be significantly lower than the Merchant Discount Rate applicable to debit or credit card transactions.

The ministry added, “Most transactions for merchants on UPI will remain free of charge.”

Government officials indicated that over 90% of transactions, including daily purchases of milk, vegetables, and groceries, would not incur any Merchant Discount Rate fees.