UPI Payments Up to Rs 2,000 Remain Free Under New Government Rules
The government has protected UPI payments up to Rs 2,000 and RuPay debit card transactions from charges while leaving scope for MDR on select higher-value merchant payments.
The government has barred banks and payment system providers from imposing direct or indirect charges on UPI transactions of up to Rs 2,000 and payments made through RuPay-powered debit cards. The decision formally protects small-value digital payments while leaving room for a separate fee structure for certain higher-value merchant transactions.
The Finance Ministry issued the notification after Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026, in August. The legislation allowed the government to designate electronic payment methods that would remain protected from transaction charges.
The move follows concerns that changes to the legal framework could eventually lead to UPI fees. Finance Minister Nirmala Sitharaman had clarified that the amendment was only an enabling provision and that consumers would not be charged for UPI payments.
Under the latest notification, UPI payments up to Rs 2,000 cannot attract charges. Transactions above that threshold are not automatically chargeable, but the government could establish a Merchant Discount Rate (MDR) framework for selected merchant payments. Any such MDR would be charged to merchants rather than consumers, while person-to-person UPI transfers would remain free.
UPI, operated by the National Payments Corporation of India, processed 24.51 billion transactions worth Rs 29.82 trillion in August. Google Pay and PhonePe together accounted for roughly three-fourths of the monthly transaction volume.
The notification also ensures that RuPay debit card payments remain free of charges.
