Parliament clears taxation amendment bill: How it affects you?
What's the story
Finance Minister Nirmala Sitharaman has clarified that the Unified Payments Interface (UPI) will continue to remain free for consumers. The statement comes after Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026. The legislation seeks to remove the link between payment systems and income tax, and provide legal backing to amend zero-MDR frameworks for digital transactions.
Legislative details
Bill passed by Lok Sabha last week
The bill was passed by the Lok Sabha last week. The Rajya Sabha endorsed it after a brief discussion.
The legislation aims to attract foreign capital, promote domestic electronics manufacturing, and simplify the use of Indian data centers by foreign cloud companies.
It also seeks to ease fund managers' relocation to India by cutting down on the list of conditions that these funds will have to satisfy to ensure that their global income does not get taxed in India.
Fee clarification
What we know about MDR
The government has reiterated that consumers will not have to pay transaction charges for using UPI. It also clarified that most merchant transactions would remain free.
Any future Merchant Discount Rate (MDR), if introduced, would be applicable only on a limited set of merchant transactions, above a certain threshold, at a nominal rate lower than regular debit and credit card MDRs.
Global reach
UPI processed transactions worth ₹29.9L crore in July alone
Launched in 2016-17, UPI has become the world's largest real-time payment system. In July 2026 alone, it processed transactions worth ₹29.9 lakh crore. The platform is now operational in 11 countries with many others interested in adopting or integrating UPI services.