NPCI clarified that GST on UPI Merchant Discount Rate will not burden most small merchants, as transactions up to Rs 2,000 remain MDR-free. It said over 96 per cent of UPI merchant transactions fall below this threshold, while P2P payments remain free
Petroleum dealers have sought exemption from the Rs 5 merchant discount rate on UPI transactions above Rs 2,000 for fuel purchases, saying the additional cost could pressure their margins. The AIPDA discussed the issue with senior Petroleum Ministry officials
Opposition parties have criticised the new UPI merchant discount rate framework, alleging it was introduced under US pressure. Congress, RJD, TMC and CPI leaders questioned the move, while the government maintained that MDR charges would not be imposed on consumers
UPI payments to merchants above Rs 2,000 will attract a 0.4 per cent MDR from October 15, with 18 per cent GST on the fee. Tax experts said eligible GST-registered merchants can claim input tax credit, reducing the overall burden
Zerodha CEO Nithin Kamath backed the introduction of MDR on P2M UPI payments, saying it could increase competition in the ecosystem. However, he flagged concerns for brokers, who could incur charges on repeated client fund transfers without generating corresponding revenue.
Finance Minister Nirmala Sitharaman rejected Congress leader Jairam Ramesh's criticism of the UPI amendment Bill, saying Merchant Discount Rate applies only to merchants. She accused the Congress of avoiding parliamentary debate, while Ramesh maintained the changes could eventually lead to charges on digital payments.
The Lok Sabha has passed a Bill amending the Payment and Settlement Systems Act, enabling the government to permit Merchant Discount Rate (MDR) on UPI and other notified digital payment modes. The amendment seeks to create a sustainable revenue model for payment service providers
Merchant Discount Rate is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. Finance Ministry’s clarification comes following reports that the government is planning to impose MDR on large-ticket UPI transactions
