Will UPI Payments Become Chargeable? Nirmala Sitharaman Answers As Tax Bill Gets Parliament Nod

Published 10 August 2026 · politics

News india Will UPI Payments Become Chargeable? Nirmala Sitharaman Answers As Tax Bill Gets Parliament Nod Will UPI Payments Become Chargeable? Nirmala Sitharaman Answers As

News india Will UPI Payments Become Chargeable? Nirmala Sitharaman Answers As Tax Bill Gets Parliament Nod Will UPI Payments Become Chargeable? Nirmala Sitharaman Answers As Tax Bill Gets Parliament Nod Published By, Last Updated: August 10, 2026, 18:34 IST Parliament passed the Taxation Bill 2026 as Nirmala Sitharaman clarified UPI transactions will remain free for consumers. FM Nirmala Sitharaman. Parliament on Monday passed the Taxation and Other Laws (Amendment) Bill, 2026, with Finance Minister Nirmala Sitharaman clarifying that the legislation does not impose any tax or transaction charge on UPI. The Bill, passed by the Lok Sabha last week, was returned by the Rajya Sabha through a voice vote after a brief discussion and the Finance Minister’s reply. Sitharaman said UPI has remained free for consumers since its launch and will continue to be so. “Will consumer pay any UPI charge – No," she said, adding that every Indian would continue to use the instant digital payment system without paying a transaction charge. What does the bill say about UPI? The legislation changes the legal framework governing Merchant Discount Rate (MDR) on UPI, RuPay and other electronic payments. At present, banks and payment system providers cannot directly or indirectly charge users for payments made through UPI and RuPay debit cards.

The Bill removes the linkage between the Payment and Settlement Systems Act and the Income Tax Act. It gives the central government legal backing to decide through notification which electronic payment modes or transactions must remain free. The government has clarified that the change does not immediately introduce a UPI fee. Users and person-to-person transactions will remain free, while a future notification could potentially allow a nominal MDR on certain categories of merchant transactions. Bill seeks to attract foreign investment The Taxation and Other Laws (Amendment) Bill, 2026, replaces the June 5 ordinance that provided income-tax exemption on interest income and capital gains earned by Foreign Portfolio Investors from investments in government securities. It also seeks to make it easier for fund managers to relocate to India by reducing the conditions that funds need to meet to ensure their global income is not taxed in India. The government has said the Bill aims to attract more foreign capital, promote domestic electronics manufacturing and make it easier for foreign cloud companies to use Indian data centres by providing “process certainty". Electronics manufacturing gets tax extension The Bill extends until tax year 2040-41 an exemption for foreign companies providing capital goods, equipment or tooling to Indian contract manufacturers. The specified goods include mobile phones, laptops, tablets and all-in-one PCs, servers and ultra-small form-factor computers, as well as sub-assemblies, hearables, wearables and related accessories.