No fee on UPI transactions, Sitharaman clarifies; government to hold PSB Confluence on August 17-18
3 min read
The government is set to host a two‑day ‘PSB Confluence’ brain‑storming session on August 17‑18, bringing together the heads of Public Sector Banks and Public Financial Institutions to share best practices, even after Parliament passed the Taxation and other Laws (Amendment) Bill, with Finance Minister Nirmala Sitharaman stressing that the bill does not levy any tax or fee on UPI users.
Key Takeaways
- Finance Minister Nirmala Sitharaman clarified the Taxation and other Laws (Amendment) Bill imposes no fee on UPI users.
- The government will host a two-day ‘PSB Confluence’ on August 17-18, gathering heads of public sector banks and financial institutions.
- About 125 attendees from PSBs and institutions like NABARD, EXIM Bank and SIDBI will participate.
- The conclave aims to develop concrete, time-bound plans centred on people-first outcomes.
The event, attended by Finance Minister Nirmala Sitharaman and Minister of State for Finance Pankaj Chaudhary, will see around 125 attendees—chairmen, managing directors and executive directors from PSBs and PFIs including NABARD, EXIM Bank, SIDBI, NHB, IIFCL, IFCI and NaBFID.
The Finance Ministry says the conclave will devise concrete, time‑bound plans centred on people‑first results, offering a forum for the institutions to discuss set topics, exchange successful approaches and consider workable measures that could be rolled out throughout the banking sector.
Talks will cover boosting affordable‑credit resources, smoothing the investment cycle for timely infrastructure roll‑out, building capability‑centre ecosystems, reinforcing rural value‑chain infrastructure, widening priority‑sector lending to underserved groups and crafting banking products aimed at youth.
The thematic sessions will address deposit mobilisation, youth‑focused banking, supporting the investment cycle, nurturing global capability centres, agriculture and horticulture value‑chain infrastructure, rethinking the credit‑card business and priority‑sector lending.
Meanwhile, Parliament cleared the Taxation and other Laws (Amendment) Bill on Monday, with Sitharaman reiterating that the bill introduces no tax or transaction fee on UPI users.
The Bill, having been approved by the Lok Sabha the previous week, was sent back by the Rajya Sabha following a brief debate and the Finance Minister’s response, settled by a voice vote.
In the Upper House, Sitharaman explained that the proposed amendment to Section 10A of the Payment and Settlement Systems Act is merely an enabling measure and does not currently impose a Merchant Discount Rate (MDR) on consumers.
“”The enabling provision we are introducing does not levy any tax or transaction fee on UPI users,” she stated.
She noted that, once Parliament’s approval is in place, the UPI and Services Steering Committee of the National Payments Corporation of India (NPCI) will evaluate whether to introduce an MDR charge, emphasizing that no MDR framework has been finalized so far.
The clarification emerged amid rumors that users might face a transaction fee on UPI payments after the proposed changes.
The Finance Ministry had previously clarified that peer‑to‑person UPI transactions will stay free of charge. It added that, should an MDR be introduced, it would apply only to a select group of merchant transactions exceeding a defined threshold and would be levied at a nominal rate—far below the MDR charged on debit or credit card payments.
“”Most merchant transactions will stay free on UPI,” the ministry remarked.
Government officials noted that over 90 % of transactions—including everyday purchases of milk, vegetables and groceries—would not incur an MDR charge. They also clarified that any MDR, if introduced, would be threshold‑based and aimed at high‑value transactions, not applied universally to all UPI payments.
The government pointed out that UPI launched in 2016 and has been free for merchants and consumers since January 2020, highlighting India’s feat of building UPI into the world’s largest real‑time interoperable payment system.
