EconomyTuesday, 11 August 2026·The Hindu - Economy
UPI MDR proposal in 2026: Section 10A amendment, 0.25–0.5% charge and ₹2,000 threshold
The 2026 Taxation and Other Laws (Amendment) Bill proposes charging specified UPI transactions above ₹2,000 through an MDR of 0.25–0.5%.
Key highlights
Direct fact
In 2026, the Taxation and Other Laws (Amendment) Bill proposed amending Section 10A of the Payment and Settlement Systems Act, 2007 to allow charges on specified electronic payment modes, including a Merchant Discount Rate of 0.25–0.5% on UPI transactions above ₹2,000.
Key specifics
- Section 10A of the Payment and Settlement Systems Act, 2007 is the legal provision being amended in 2026.
- The proposed MDR range is 0.25–0.5% for UPI transactions above ₹2,000.
- The government said the ₹2,000 threshold would cover about 5% of transactions by volume.
- The same threshold would cover roughly 65% of UPI transaction value.
- UPI was launched in 2016 and was built under a zero-MDR regime to promote a less-cash economy after demonetisation in November 2016.
Exam lens
Question type: Economy and policy match-the-following, Section 10A, MDR, UPI, Payment and Settlement Systems Act, 2007, ₹2,000 threshold; TNPSC may ask which amendment enables taxation of electronic payment modes and what share of UPI value is affected.