Finance Minister Nirmala Sitharaman
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Finance Minister Nirmala Sitharaman on Thursday said that merchant discount rate (MDR) is applied only on merchants and not on end users. However, she clarified that no decision yet on MDR has been taken yet.The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, also known as ToLA Bill, without any debate on Thursday. Apart from various amendments, the Bill has proposed amending the Payment and Settlement Systems Act, 2007. Once the Bill is enacted, the government can notify a list of the electronic modes of payments which will not attract any charge. Any mode or platform outside this negative list will attract MDR.Senior Congress leader Jairam Ramesh, in a social media post, alleged that the amendment will end the legal guarantee for keeping UPI transactions free of charge. This will pave the way for MDR, which can be levied on all digital transactions in future. This means users may have to pay for UPI transactions.Responding to this, Sitharaman said: “MDR applies only on the merchants and not on the end users/customers. It will support the banks & fintechs to invest more on infrastructure, innovation & security. All users of UPI will reap the benefits of this investment.” Further, more importantly, the UPI and Services Steering Committee, headed by the NPCI, is yet to decide on the MDR. This will happen after the Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, which proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007.“All this could have been discussed on the floor of the House if your party @INCIndia engages constructively in Parliament when the Bill was/is tabled. (LS/RS respectively),” she said.Published on August 6, 2026
