Govt Clarifies: No Fees on UPI Transactions

New Delhi (The Uttam Hindu): The Centre on Monday reiterated that there is no proposal to impose transaction charges on Unified Payment Interface (UPI) based digital payments.

UPI transactions are facilitated by the National Payments Corporation of India (NPCI) and its August 30, 2019 circular allowed acquiring banks to charge merchant discount rate (MDR) at the rate of 0.30 per cent of the transaction value. “However, section 10A of the Payment and Settlement Systems Act, 2007 provides that no bank or system provider shall levy any charge on a payer or a beneficiary receiving payment for making payment through electronic means prescribed under section 269SU of the Income Tax Act, 1961,” minister of state for finance Pankaj Choudhary said in a written reply to a question in the Lok Sabha.

Accordingly, the Central Board of Direct Taxes (CBDT) had notified UPI and RuPay Debit Card as prescribed electronic modes of payment under section 269SU of the Income Tax Act, 1961. To ensure continuity of UPI service by ecosystem partners, the government had implemented the incentive scheme from FY 2021-2022 to FY 2024-25. “During this period, the government has provided incentive support of about Rs 8,730 crore,” the Minister of State said. UPI transactions grew from 92 crore in FY 2017-18 to 18,587 crore in FY 2024-25 with a CAGR of 114 per cent. During the same period, the transaction value grew from Rs 1.10 lakh crore to Rs 261 lakh crore. According to the government, UPI achieved a new milestone in July 2025, when for the first time, more than 1,946.79 crore transactions were recorded in a single month.

The total volume of digital payment transactions in the country is projected to grow from Rs 2,071 crore in FY 2017-18 to Rs 22,831 crore in FY 2024-25, growing at a CAGR of 41 per cent. During the same period, the transaction value grew from Rs 1,962 lakh crore to Rs 3,509 lakh crore.