Digital payments through UPI have been growing rapidly across India. Against this backdrop, the central government is reportedly considering a proposal to introduce charges on certain types of UPI transactions. However, officials have clarified that there will be no charges on person-to-person UPI transfers, meaning users will not have to pay an MDR for sending money to family members, friends or other individuals.
According to the proposal under consideration, a Merchant Discount Rate (MDR) of 0.25% to 0.4% could be imposed on business-related UPI payments exceeding ₹2,000. The proposed change has reportedly been included in the Taxes and Other Laws (Amendment) Bill. The charges, if introduced, are expected to apply only to payments made to merchants and businesses, rather than personal transfers.
The government has not yet taken a final decision on when the proposed MDR system would be implemented. Until then, person-to-person UPI transactions are expected to remain free of such charges. The proposal, if approved, could mark a significant change in the way certain high-value merchant UPI transactions are handled.
