India’s gold jewellery industry has appealed for an exemption from the recent rise in merchant discount rate charges on high-value UPI transactions, citing concerns over increased operational costs in a sector already burdened by taxes and compliance costs.
India’s gold jewellery sector has asked for an exemption from the new merchant discount rate on high-value UPI payments, saying the charge would add another layer of cost to a business already burdened by taxes, compliance and security spending. According to The Hindu BusinessLine, S Abdul Nazar of the Kerala Gold and Silver Merchants Association said jewellers are already paying GST, hallmarking costs, HUID-related expenses, bank fees and staff costs, and that MDR would hit small and medium-sized firms hardest.
The request comes as the National Payments Corporation of India has introduced a revised MDR framework for UPI, under which person-to-person transfers remain free, while person-to-merchant payments above ₹2,000 will attract a fee of 0.4%. The charge is capped at ₹300 for transactions of ₹75,000 and above, and small merchants are exempt. Reports in Livemint, Upstox, Financial Express, Kotak Neo and TechObserver said the framework is intended to support the long-term sustainability of the UPI ecosystem, including payments infrastructure and cybersecurity.
For jewellers, however, the issue is the volume of large-ticket purchases that move through UPI each day. Nazar told The Hindu BusinessLine that an individual fee may appear modest, but the cumulative cost across thousands of transactions could become substantial over a month. He argued that gold purchases should not be treated like ordinary retail spending because the trade is concentrated in high-value bills rather than low-value, high-frequency sales.
The industry’s concern is likely to centre on whether the new rules, which are designed to protect individuals and smaller merchants, are suitable for a sector where even routine sales can quickly cross the MDR threshold. While the government has said the cost should not be passed directly to customers, merchants would still bear the charge in practice, leaving jewellers to absorb yet another operating expense.
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