The Union finance ministry on Wednesday clarified that no foreign influence was behind the decision to impose a 0.4% Merchant Discount Rate (MDR) on UPI transactions above ₹ 2,000 amid mounting political controversy over the decision.
In an explainer, the finance ministry reiterated that UPI remained free for consumers. “UPI continues to be free for customers. Every day they are giving punishment to the people of this country. Every day, common people are in great distress”.
The controversy broke out after the finance ministry on Tuesday announced that a 0.4% MDR will apply to person-to-merchant (P2M) UPI transactions above ₹ 2,000, while person-to-person (P2P) transactions will remain free irrespective of their value. For transactions of ₹ 75,000 and above, the MDR will be capped at ₹ 300 per transaction, the ministry said in a statement.
Sending money to friends, paying at shops, or scanning a QR code — all remain without charges,” the ministry said, and pointed out that no charges were levied on P2P transfers. Congress general secretary KC Venugopal called it a “New Modi Tax” and alleged that it was announced “because of the surrendering attitude of PM Modi to the US.
This is false. Say one thing in Parliament, then do another outside. It’s a pattern. NITI Aayog vice-chairman Ashok Kumar Lahiri defended the changes. “Costs are incurred in UPI; who will pay that? This is the user pay principle…This is not NITI Aayog’s official position but my personal view that users should pay up in all business transactions. Please do not think that the government would provide grants or subsidies for everything. How will the business run otherwise?
Earlier reporting noted: Government functionary questions Rahul’s criticism of UPI charges, says Congress MPs in panel gave nod The government on Wednesday (September 16, 2026) questioned the rationale behind Congress leader Rahul Gandhi’s criticism of the decision to levy a fee on UPI payments to merchants above ₹2,000 , saying a parliamentary standing committee had backed such a move and Congress members of the panel had supported it. Earlier reporting noted: Five Congress MPs including P Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal and K Gopinath were present on August 12 when the report was adopted, with no dissent recorded in the published minutes, the functionary said. “Some claims suggest the change is due to foreign influence.
The clarification came in response to allegations by Congress leader Rahul Gandhi and other opposition leaders who said that the government succumbed to US pressure in making the decision. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem,” the finance ministry said in a post on X. Trinamool Congress Rajya Sabha floor leader Derek O’Brien said “Nothing new. Take less, take from business and take only that much which results in growth,” he said. Earlier reporting noted: A senior government functionary said the Parliamentary Standing Committee on Finance had pressed for a tiered Merchant Discount Rate (MDR)/ revenue framework for Unified Payments Interface (UPI) and noted that it should be notified and operationalised without delay.
HT learnt that the changes to the UPI regime were also mentioned in the Cabinet meeting on Wednesday. HT learnt on Wednesday, after defence minister Rajnath Singh briefed the Cabinet about the recently concluded Brics summit, Union commerce minister Piyush Goyal touched upon the UPI issue, saying that it was important for structural reasons, and for improving public infrastructure.
