Consumers will not have to pay any charges on Unified Payments Interface (UPI) transactions, Finance Minister Nirmala Sitharaman told Parliament on Monday, amid concerns that the legislation could pave the way for charges on digital payments.

“UPI has remained free for consumers since its launch, and every Indian will continue to make instant digital payments without paying a transaction charge,” she said during a discussion on the Taxation and Other Laws (Amendment) Bill, 2026.

Parliament on Monday passed the Bill, after the Rajya Sabha returned it to the Lok Sabha following a brief discussion and reply by the finance minister. The Bill was passed by the Lok Sabha last week.

Replying to the discussion, Sitharaman said small merchants would remain central to UPI’s financial inclusion push, with the “vast majority of merchant transactions — including ordinary, low-value transactions” continuing to remain free. Any future Merchant Discount Rate (MDR), she said, would apply only to a limited category of merchant transactions above a prescribed threshold.

The Bill proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007. The government said the amendment was only an enabling provision and it would not impose any transaction charge on UPI users. It would allow the government to specify, through notification, electronic payment modes that would continue to receive statutory protection against charges.

“Therefore, no MDR framework has yet been finalised,” the minister said.

Once the Bill is passed, the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), will consider whether an MDR should be introduced and, if so, determine its scope and structure.

UPI processed 23.66 billion transactions worth Rs 29.9 lakh crore in July 2026 alone. Sitharaman credited small merchants, including PM SVANidhi beneficiaries and street vendors, with driving the growth of the digital payments system.