No proposal to impose transaction charges on UPI payments, reiterates Centre

New Delhi, Aug 18 (IANS) There is no proposal to impose transaction charges on unified payments interface (UPI) based digital payments, the government reiterated on Monday.

Unified Payment Interface (UPI) transactions are facilitated by the National Payment Corporation of India (NPCI), and its circular (dated 30.08.2019) had permitted the acquiring banks to charge Merchant Discount Rate (MDR) at 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 impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under section 269SU of the Income-tax Act, 1961," Minister of State for Finance, Pankaj Chaudhary, said in a written reply to a question in Lok Sabha.

Accordingly, the Central Board of Direct Taxes (CBDT) had notified UPI and RuPay debit cards as prescribed electronic modes of payment under Section 269SU of the Income-tax Act, 1961.

In order to ensure continuity of the UPI services by the ecosystem partners, the government had implemented the incentive scheme during the last four years -- FY 2021–2022 to FY2024–25.

"During this period, the government has extended incentive support of approximately Rs 8,730 crore," the minister informed.

The 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 value of transactions has grown from Rs 1.10 lakh crore to Rs 261 lakh crore.

In July 2025, UPI reached another milestone, recording over 1,946.79 crore transactions in a single month for the first time, according to the government. The total volume of digital payment transactions in the country has increased from 2,071 crore in FY 2017-18 to 22,831 crore in FY 2024-25, growing at a CAGR of 41 per cent.

During the same period, the value of transactions has grown from Rs 1,962 lakh crore to Rs 3,509 lakh crore, the minister said.

--IANS

na/vd