UPI transactions up to Rs 2,000 and all RuPay debit card payments will carry no charges for banks or payment providers, per a Finance Ministry notification dated September 14. The order cites Section 10A of the Payment and Settlement Systems Act, 2007, and covers only those two modes, both run by the National Payments Corporation of India.

The notification looks like a reaffirmation of free UPI. It is closer to a narrow carve-out inside a law that now permits charges by default.

The Law Changed First

Parliament passed the Taxation and Other Laws (Amendment) Act, 2026 in August, amending Section 10A of the PSSA. The old provision automatically protected any electronic payment mode notified under the Income-tax Act from charges, a blanket zero-MDR guarantee. The amended law removes that automatic protection and lets the Centre choose, mode by mode, what stays free. Business Today reports Finance Minister Nirmala Sitharaman had to publicly address MDR-return concerns when the amendment passed, since the change removed a statutory floor rather than added one.

The September 14 notification is the government’s first use of that discretionary power, and it applies narrowly: RuPay debit cards and UPI payments up to Rs 2,000. Nothing in it protects UPI transactions above that line, or any other electronic mode, from a future charge.

The Hans India and Inc42 both report that any future merchant discount rate would apply only to select merchant transactions above the threshold, at a rate lower than existing debit or credit card MDR, with person-to-person UPI payments remaining free regardless. Inc42 adds a detail absent from the other coverage: the UPI and Services Steering Committee, headed by NPCI, has been tasked with setting the actual MDR framework for transactions above Rs 2,000. That committee, not this notification, is where rates get decided.

The distinction matters. Whether charges are legally possible was settled in August. Whether they have been set is still open, pending the NPCI-led committee. The notification answers only the first question for the sub-Rs 2,000 band, and it answers no.

A Fast Turnaround

LatestLY notes the notification arrived a month after the amendment that enabled it, quick by the standards of Indian payments regulation, where NPCI circulars on matters like UPI market-share caps have taken years to firm up once flagged. The pace suggests officials wanted the zero-charge assurance public before banks or merchants tested the new discretionary power independently.

The obvious rebuttal: nothing has changed for users day to day. P2P UPI was always going to stay free, small-ticket payments remain free now, and the notification simply formalises what officials had promised verbally in August. That holds for the roughly 57% of UPI transactions industry estimates place under Rs 2,000.

It does not address the structural shift. A zero-MDR guarantee that existed by statute for a decade has been replaced by one that exists by notification, revisable at the Centre’s discretion. The Rs 2,000 threshold did not exist in the old law and can change without another Parliamentary amendment. The NPCI steering committee’s mandate on transactions above that line remains open: no rate, no timeline, no transaction categories specified yet.

Sources

  • Entrackr: primary notification details and background on the underlying amendment
  • The Hans India: Section 10A citation and MDR-threshold detail
  • LatestLY: timing context relative to the August amendment
  • Business Today: notification date and Sitharaman’s prior MDR remarks
  • Inc42: detail on the NPCI-led steering committee’s future role

Reporting compiled and contextualised by TechScoop India. Figures reconciled across the sources above.

Originally reported by entrackr.