India’s Parliament has passed significant reforms, establishing a National Tribunals Commission to enhance judicial independence and introducing a merchant fee on UPI transactions over ₹2,000, marking a pivotal move in governance and digital payments infrastructure.
India’s Parliament on Monday pushed through two contentious reform measures that together underline the government’s effort to redraw the rules of governance in both the justice system and digital payments. The Lok Sabha passed the Tribunals Reforms Bill, 2026, after noisy Opposition protests, while lawmakers also cleared the Taxation and Other Laws (Amendment) Bill, 2026, which opens the door to a fresh merchant fee on selected UPI payments above ₹2,000. Taken together, the bills mark a notable shift: one recentres control of quasi-judicial bodies, the other potentially alters the economics of the payment rail that has powered India’s digital transactions boom.
The tribunals legislation is the more direct answer to a long-standing institutional problem. For years, the Supreme Court has objected to the way Central ministries retained influence over tribunals that often hear disputes involving those very ministries, a set-up critics say created an obvious conflict of interest. The new law establishes a National Tribunals Commission to supervise appointments, tenure, removal and service conditions across more than 40 Central tribunals, replacing the fragmented ministry-led model that had drawn repeated judicial censure. Policy analysts and legal commentators have described the commission as a much-needed attempt to insulate tribunal administration from executive pressure, although the effectiveness of the reform will depend on how independent the new body is in practice and whether its funding and governance are protected from the same political leverage the courts have warned against.
The tribunal overhaul follows a period of heightened judicial scrutiny. In November 2025, the Supreme Court struck down key parts of the Tribunal Reforms Act, 2021 and directed the Centre to create a National Tribunals Commission to secure the autonomy and impartiality of the system. The court’s concern was not merely administrative. It said the design of the tribunal framework had become structurally unsound, undermining the very purpose of creating specialised adjudicatory bodies outside the ordinary courts. The latest bill is therefore best understood not as a new idea, but as the government’s legislative response to a judicial instruction that has been pending for months.
The payments bill is no less consequential, even if the change under discussion is narrower. The government is considering a merchant discount rate of 0.25% to 0.5% on UPI transactions above ₹2,000, a reversal of the zero-charge regime introduced in 2020 to accelerate adoption. That policy helped propel UPI into the centre of India’s retail payments ecosystem. According to NPCI and RBI-linked data cited in current affairs analyses, the system processed more than 18,000 crore transactions worth about ₹245 lakh crore in FY 2025-26, with volume growing roughly eight-fold since FY 2020-21 under the zero-MDR framework. The proposed levy would affect only a small share of transactions by count, but a far larger share by value, raising the stakes for banks, payment service providers and merchants.
The policy debate now turns on who would actually bear the cost. In a two-sided payments market, fees do not always land where they are formally imposed, and industry observers warn that banks or fintech firms may absorb part of the burden if competition prevents them from passing it on. That could weaken incentives to invest in payment infrastructure. Smaller merchants may also fear a drift back towards cash if digital acceptance becomes less attractive at the margins. For the government, though, the argument is likely to be fiscal and structural: zero MDR was always a subsidy to spur adoption, and the latest bill suggests ministers are now willing to test whether the digital payments market can shoulder a modest charge without slowing the system that has come to define India’s cashless transition.
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