No Bank Charges on UPI Transactions Up to Rs 2000

New Delhi:- The government, while announcing new rules, has clarified that banks and payment system providers cannot levy any fee on UPI transactions of up to Rs 2,000. The Ministry of Finance issued a gazette notification on Monday under the Payment and Settlement Systems Act, 2007, stating that customers will not have to pay any charge on UPI transactions below Rs 2,000 and payments made through RuPay debit cards. The decision comes amid ongoing discussions over the imposition of charges on digital payments following the passage of the Taxation and Other Laws Act in Parliament.
According to the notification, transactions up to Rs 2,000 will remain completely free, while the option of imposing charges on transactions above this limit has been kept open.
The government has clarified that banks cannot recover any fee from customers, either directly or indirectly, for these transactions. The Ministry of Finance further said that even if a Merchant Discount Rate is introduced in the future, it will apply only beyond a specified threshold and to certain commercial transactions. MDR is the charge paid by a merchant to banks for processing digital payments, while it can range from 1 to 3 per cent on credit cards.
Earlier, an important bill had been passed in the Lok Sabha amid commotion and without any discussion, clearing the way for charges to be imposed on UPI and other digital payments in the future. The House had passed the bill amending the Payment and Settlement Systems Act, 2007, through a voice vote.
The main objective of the amendment is to remove the existing legal provision that prevented banks and payment service providers from levying a Merchant Discount Rate on notified electronic payment methods. The proposed changes are part of a broader taxation-related legislation introduced in the House on Tuesday.