Centre Reaffirms: No Plans to Levy Charges on UPI Payments

New Delhi – The government on Monday reiterated that there is no proposal to impose transaction charges on Unified Payments Interface (UPI)-based digital payments.

UPI transactions are managed by the National Payments Corporation of India (NPCI). While an NPCI circular issued on August 30, 2019, allowed acquiring banks to charge a Merchant Discount Rate (MDR) of 0.30% of the transaction value, the law prevents such charges on users.

“Section 10A of the Payment and Settlement Systems Act, 2007, specifies that no bank or system provider can impose charges on a payer making a payment, or a beneficiary receiving one, through electronic modes prescribed under Section 269SU of the Income-tax Act, 1961,” Minister of State for Finance Pankaj Chaudhary clarified in a written reply to the Lok Sabha.

The Central Board of Direct Taxes (CBDT) has already notified UPI and RuPay debit cards as approved electronic payment methods under Section 269SU.

To sustain the UPI ecosystem, the government has been running an incentive scheme over the last four financial years (FY 2021–22 to FY 2024–25), providing support worth ?8,730 crore.

UPI has seen phenomenal growth since its inception. Transactions rose from 92 crore in FY 2017–18 to 18,587 crore in FY 2024–25, recording a compound annual growth rate (CAGR) of 114%. In terms of value, UPI transactions grew from ?1.1 lakh crore to ?261 lakh crore during the same period.

In July 2025 alone, UPI crossed a new milestone with 1,946.79 crore transactions in a single month.

Overall, India’s digital payments ecosystem expanded significantly, with transaction volumes increasing from 2,071 crore in FY 2017–18 to 22,831 crore in FY 2024–25 (CAGR of 41%). The transaction value also rose from ?1,962 lakh crore to ?3,509 lakh crore over the same period.

With inputs from IANS