India’s parliament approves the Taxation and Other Laws (Amendment) Bill, with Finance Minister Nirmala Sitharaman assuring no immediate increase in Merchant Discount Rate charges for small merchants and consumers on UPI transactions, amidst discussions on future charges for large merchants.
Parliament on Monday cleared the Taxation and Other Laws (Amendment) Bill, 2026, after the Rajya Sabha returned the Money Bill to the Lok Sabha with recommendations. Finance Minister Nirmala Sitharaman used the debate to reassure lawmakers and the public that consumers and small merchants will not face Merchant Discount Rate charges on Unified Payments Interface payments, and that the government has not finalised any broader MDR framework for UPI.
Sitharaman said the amendment on digital payments is only an enabling provision, not a levy. She said it gives the government scope to notify electronic payment modes that will continue to enjoy statutory protection against charges, while making clear that small merchants remain outside any proposed fee structure. Recent reporting by Mint and Moneycontrol had indicated that officials were weighing a possible MDR on higher-value UPI transactions for large merchants, with any charge limited to merchants rather than customers.
The debate came against the backdrop of the government’s effort to keep UPI free for everyday users while finding a way to support the system’s long-term economics. Earlier this year, the Union Budget set aside a ₹2,000 crore subsidy for UPI and RuPay transactions, underscoring the state’s willingness to shoulder part of the cost of digital payments. Industry reporting has suggested that any future MDR, if introduced, would likely be aimed at large merchants and higher-value payments, leaving small businesses and person-to-person transfers untouched.
Beyond digital payments, the bill carries a wider package of tax and investment measures meant to support manufacturing and attract capital. These include exemptions tied to specified data-centre services in India, incentives for global diamond trading, support for electronics manufacturing and changes affecting eligible investment funds. Sitharaman said the reforms were intended to strengthen domestic industry, create jobs and keep assets, profits and employment within Indian companies, while also granting tax relief in some cases to foreign institutional investors and the Bank for International Settlements.
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