The government has barred banks and payment system providers from imposing direct or indirect charges on UPI transactions of up to Rs 2,000 and payments made through RuPay-powered debit cards.
A Finance Ministry notification formally identifies these electronic payment modes as protected from such charges.
The move follows Parliament’s passage of the Taxation and Other Laws (Amendment) Bill, 2026, which empowered the government to specify payment modes that would retain statutory protection from charges.
What Happens to Higher-Value UPI Payments?
The notification sets Rs 2,000 as the threshold for UPI transactions covered by the protection. However, this does not mean users will immediately be charged for payments above that amount.
The framework leaves scope for a separate Merchant Discount Rate, or MDR, on certain higher-value merchant transactions.
The government has maintained that any MDR, if introduced, would be applicable to merchants and not consumers. Person-to-person UPI transfers would also remain free.
Finance Minister Nirmala Sitharaman had earlier said the legal amendment was only an enabling provision and that consumers would not have to pay charges for UPI transactions.
UPI, operated by the National Payments Corporation of India, processed 24.51 billion transactions worth Rs 29.82 trillion in August. Google Pay and PhonePe accounted for around three-fourths of the transaction volume.
The latest rules also ensure that RuPay debit card payments remain free of charges.
