India's Rajya Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026 [1], while confirming that UPI payments will remain free for consumers.
The decision preserves the accessibility of India's primary digital payment system during a period of broader tax reform. Any shift in the cost structure of Unified Payments Interface (UPI) transactions could impact millions of small-scale users and vendors who rely on the zero-fee model.
Finance Minister Nirmala Sitharaman addressed the Rajya Sabha during the debate on the legislation. She said, "UPI payments will remain free for consumers" [1]. The statement comes as the government navigates the balance between encouraging digital adoption and ensuring the sustainability of the payment infrastructure.
A central point of discussion during the session was the Merchant Discount Rate, or MDR, which is the fee merchants pay to banks for processing digital transactions. Sitharaman said, "No MDR framework has been finalised yet" [1]. The absence of a finalized framework means that the current cost structure for merchants remains unchanged for the time being.
The passage of the Taxation and Other Laws (Amendment) Bill, 2026 [1] is part of the ongoing monsoon session of Parliament. The legislation aims to enact tax reforms, and address various legal amendments to the taxation system. The session has seen intense debate over how these reforms will integrate with the existing digital economy.
Following the proceedings in the Rajya Sabha, the Lok Sabha adjourned until Tuesday, Aug. 11 [2]. The government continues to review the digital payment landscape to determine if a sustainable fee structure for merchants is necessary without passing those costs to the end user.
“"UPI payments will remain free for consumers."”
The government's insistence on keeping UPI free for consumers suggests that digital financial inclusion remains a higher priority than immediate revenue generation from payment rails. By delaying the MDR framework, the Ministry of Finance is avoiding potential friction with the merchant community, though the eventual introduction of such fees is often necessary to incentivize banks and payment service providers to maintain the network.
