Government Bars Charges on UPI Transactions Up to Rs 2,000
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Khushi Jain
- September 15, 2026
The Centre has specified that banks and payment system providers cannot impose charges on Unified Payments Interface (UPI) transactions of up to Rs 2,000 or payments made using RuPay-powered debit cards.
In a notification issued on Monday, the Finance Ministry said that “no bank or system provider shall impose, whether directly or indirectly, any charge” on a person making or receiving a payment through the specified electronic modes.
The electronic modes specified by the government include RuPay-powered debit cards and UPI transactions up to Rs 2,000. Both RuPay and UPI are managed by the National Payments Corporation of India (NPCI).
For UPI transactions above Rs 2,000, the notification does not specify a no-charge provision, leaving scope for merchant discount rate (MDR) to be introduced on higher-value UPI transactions.
The notification follows the Taxation and Other Laws (Amendment) Act, 2026, which amended the Payment and Settlement Systems Act, 2007. The amendment empowers the Centre to specify electronic payment modes on which banks and system providers cannot levy charges.
The amendment, passed in August, replaced the earlier provision under which electronic modes notified under the Income-tax Act were protected from such charges. The amended law allows the government to specify the modes and transaction categories that will remain charge-free.
The amendment came amid discussions around a possible MDR framework for UPI. The government had clarified that the amendment itself did not impose any charge on UPI users. Any proposed MDR was expected to be limited to certain merchant transactions, while person-to-person (P2P) UPI payments would continue to remain free.
The latest notification now specifies UPI transactions up to Rs 2,000 and RuPay-powered debit card payments under the no-charge provision. It does not introduce an MDR or specify any rate for UPI transactions above Rs 2,000.
FAQs
1. Which UPI transactions cannot be charged under the latest notification?
UPI transactions of up to Rs 2,000 cannot be charged.
2. Which debit card payments are covered under the no-charge provision?
Payments made using RuPay-powered debit cards are covered.
3. What happens to UPI transactions above Rs 2,000?
The notification does not specify a no-charge provision for transactions above Rs 2,000.
4. Who manages RuPay and UPI?
Both RuPay and UPI are managed by the National Payments Corporation of India (NPCI).
5. Does the notification introduce an MDR for UPI transactions above Rs 2,000?
No. It does not introduce an MDR or specify any rate for such transactions.
