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Congress challenges Centre’s new UPI merchant charges framework (Img:X)
New Delhi: The Congress has rejected allegations that its MPs backed or failed to oppose a proposal for charging merchants on Unified Payments Interface (UPI) transactions during a meeting of the Parliamentary Standing Committee on Finance in August.
Gaurav Gogoi, Deputy Leader of the Opposition in the Lok Sabha and one of the Congress MPs who attended the meeting, said there was "no specific proposal on UPI tax when they met the members of the Finance Committee". Five Congress MPs — Gogoi, P Chidambaram, Manish Tewari, Kishori Lal and K Gopinath — were present at the August meeting.
Reports had claimed that the parliamentary panel called for a tiered Merchant Discount Rate (MDR) framework for UPI transactions, and that the Congress MPs present at the August 12 meeting did not record their dissent, according to the published minutes.
The standing committee, headed by BJP MP Bhartruhari Mahtab, had referred to an earlier recommendation stressing the need for a viable revenue model for UPI. It noted that legislative-enabling provisions for a tiered MDR structure had been brought forward.
At the same time, the committee expressed concern over the gap between the government’s allocation of Rs 2,000 crore and the industry’s estimated annual operational cost of around Rs 20,700 crore.
The controversy comes after the Centre announced a new UPI fee framework on Tuesday, ending nearly six years of fully free merchant payments. From October 15, a 0.4 per cent MDR will apply to merchant UPI transactions above Rs 2,000, while person-to-person transfers and merchant payments up to Rs 2,000 will remain free.
The fee will be paid by merchants rather than consumers. It will also be capped at Rs 300 for transactions worth Rs 75,000 or more.
The National Payments Corporation of India (NPCI), which operates the UPI network launched in 2016, said the revenue generated through the framework would support investments in infrastructure resilience, cybersecurity, fraud prevention, innovation and customer service.
According to NPCI, industry estimates put the annual cost of running UPI — including servers, bandwidth, fraud prevention and technical support from banks — at roughly Rs 20,000 crore. The Department of Financial Services separately told the finance committee that the payments industry spends around Rs 20,700 crore every year on person-to-merchant transactions.
A parliamentary committee report in March had also flagged concerns that the absence of MDR was making the UPI model financially difficult to sustain.
UPI has meanwhile expanded beyond India and is now operational in at least eight countries, including Bhutan, Nepal, Sri Lanka, the UAE, Singapore, France and Qatar. India has also entered into agreements with more than 20 countries for cooperation on its UPI system.
Gogoi said the recent UPI fee proposal was not discussed by the finance committee in the form in which the government has now announced it.
"The Parliament Standing Committee on Finance has not discussed the UPI tax proposal that the Modi government has recently announced. The Department of Finance did not have any specific proposal on UPI tax when they met the members of the Finance Committee," Gogoi posted on X on Thursday morning.
"Questions were raised on the need for MDR but the representatives of the government did not have any specific or satisfactory answers at that point," he said. Gogoi also alleged that the decision benefited major American corporations and called on Prime Minister Narendra Modi to withdraw the measure.
"Stop surrendering, PM Modi," the Congress MP said.
The Parliament Standing Committee on Finance has not discussed the UPI tax proposal that the Modi government has recently announced.
The Department of Finance did not have any specific proposal on UPI tax when they met the members of the Finance Committee.
Questions were… https://t.co/V20yu3qmMm
— Gaurav Gogoi (@GauravGogoiAsm) September 17, 2026
The Congress has alleged that the Centre gave in to US demands by ending the zero-MDR regime on UPI transactions, arguing that the move could benefit American card networks. The US Trade Representative had earlier criticised UPI’s free model, saying it had contributed to the loss of market share for Visa and Mastercard.
Manish Tewari, another Congress MP who attended the meeting, also backed Gogoi and rejected the suggestion that the party had agreed to the government’s latest UPI fee proposal.
"My colleague @GauravGogoiAsm is correct no specific proposal qua the recent Merchant Discount Rate -MDR to be levied on UPI transactions from October 15 th 2026 was ever brought before the Parliamentary standing of Finance- rate, quantum, amount of fee to be charged, ceiling and exemption slabs etc," Tewari said.
He described it as "unfortunate" that the government was using proceedings of Parliamentary Standing Committees to score "brownie points".
"Even on the principle or conceptual basis of MDR as my colleague @GauravGogoiAsm points out concerns were raised by members with regard to its need , efficacy etc over the course various sittings of the Committee. To claim that a particular measure was supported by 'certain members' of the committee is an inaccurate and fallacious characterisation of the confidential proceedings of a Parliamentary Committee," Tewari added.
It is unfortunate that proceedings of Parliamentary Standing Committees that are supposed to be privileged are now sought to be used by the government to score brownie points .
My colleague @GauravGogoiAsm is correct no specific proposal qua the recent Merchant Discount Rate… https://t.co/wAeHURPWwO
— Manish Tewari (@ManishTewari) September 17, 2026
Congress General Secretary and MP Randeep Singh Surjewala also criticised the decision, saying September 14 would be remembered as a "day of digital somersault". He alleged that allowing charges on UPI merchant transactions above Rs 2,000 amounted to a "betrayal" of ordinary citizens.
The finance ministry, however, rejected the allegation that foreign pressure had influenced the decision. In a post on X on Wednesday, it said:
"Some claims suggest the change is due to foreign influence. This is false. India's UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem," the finance ministry said.
At a press conference, Congress spokesperson Supriya Shrinate criticised the new framework, arguing that UPI handles huge transaction volumes and alleging that Prime Minister Modi had once again decided to take money out of people’s pockets.
The dispute has therefore centred on two separate questions: whether the finance committee had specifically endorsed the newly announced MDR structure, and whether the government's decision was influenced by concerns raised by the United States over UPI’s impact on foreign card networks.
