UPI Transactions to Remain Free as Parliament Clears Taxation Bill: Nirmala Sitharaman
The Parliament has cleared the Taxation and Other Laws (Amendment) Bill, and Finance Minister Nirmala Sitharaman said the UPI transactions will continue to be free for consumers. The legislation does not levy any UPI transaction.
On August 10th, the Taxation and Other Laws (Amendment) Bill was enacted by Parliament. In her remarks on the Bill, Finance Minister Nirmala Sitharaman emphasised that UPI will continue to be free of charge and that the legislation does not impose any tax on it. Following a short discussion and the Finance Minister's reply, the Bill was returned to the Rajya Sabha by voice vote following its passage by the Lok Sabha last week.
She stated that the Bill did not intend to impose any transaction or fee on UPI. Since its establishment, UPI has remained free for consumers, according to Sitharaman. In addition, she emphasised that all Indians will keep making this instant digital without incurring any transaction fees.
Other Financial Amendments Govt. Announced
Additionally, the bill sought a separation of the Income Tax Act from the Payment and Settlement Systems Act. In addition, the government will have the necessary legal support to change the zero-MDR framework for UPI and RuPay card transactions. Banks and payment processors are currently unable to impose any fees on customers for using UPI and RuPay debit cards. In order to maintain the independence of certain electronic payment methods or transactions, the Bill suggests that the federal government be able to make such decisions via notification. Among other goals, the government hopes to entice greater international investment through the Bill.
In addition, the government is working to facilitate the use of Indian data centers by international cloud corporations by offering "process certainty" and to boost domestic electronics manufacturing. It is superseded by the Taxation and Other Laws (Amendment) Bill, 2026, which was passed on June 5, 2026. Foreign portfolio investors (FPIs) that invest in G-Secs are free from income tax on interest and capital gains according to the new regulations. One of the goals of the bill is to make it simpler for fund managers to move their operations to India. This will be achieved by reducing the number of requirements that these funds must meet to avoid paying taxes on their international profits.
India’s Growing Network of UPI
From INR 84.16 lakh crore in FY15 to 24,161.69 crore in FY26, the total value of all UPI transactions increased by INR 314.23 lakh crore, or over $3.56 trillion. As of June 2026, 55.49 crore users were onboarded, making it the plumbing of India’s retail sector.
The zero-MDR policy was also never cost-free for the government. The government's expenditure increased from INR 1,389 crore in 2021-22 to INR 3,631 crore in 2023-24 as a result of a parallel incentive program that reimbursed banks and NPCI. This subsidy model is not sustainable, according to the Payments Council of India, which has explicitly asked the government to reconsider 0% MDR for a long time.
