- Decision to levy 0.4% MDR on UPI challenged in Supreme Court
- Public Interest Litigation by Petitioner Anjan Dutta against Central Govt. Notification
- The petition alleges violation of fundamental rights and freedom of trade
Supreme Court On UPI Fees: After the central government decided to impose a fee on UPI, the decision is facing opposition from across the country. In this way, the issue of this fee case has reached the Supreme Court. A notification charging 0.4% MDR on UPI payments above ₹2,000 has been challenged in the Supreme Court. A petitioner named Anjan Dutta has filed a Public Interest Litigation in the court, alleging violation of fundamental rights of equality before law and trade.
The petitioner contends that the decision is being implemented without proper discussion and due process of law has not been followed. This will burden small traders. To avoid additional UPI charges, demand for cash payments may resume. This will impact the objective of implementing a digital economy.
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The central government has announced a 0.4% charge on UPI payments above ₹2,000 to merchants from October 15. Transactions between individuals and transactions of small amounts are exempted from any charges. The government's decision to levy charges on UPI payments has heated up politics in the country. The entire opposition party including the Congress is attacking the government on this issue. Leader of Opposition in Lok Sabha and Congress MP Rahul Gandhi has demanded that Prime Minister Narendra Modi withdraw the tax on UPI.
Important Points Regarding UPI Payments
No MDR will be charged on UPI transactions up to ₹2,000.
0.4 percent MDR will be applicable on consumer-to-merchant transactions above ₹2,000.
On a purchase of ₹3,000, the merchant has to pay a fee of ₹12 to the depositing bank at a rate of 0.4 percent.
This commission will be divided among the partners of the entire payment system, including banks.
Person-to-person transactions will not be charged.
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MDR will be limited to a maximum of ₹300 per transaction for payments of ₹75,000 and above. Essential sectors like telecom, insurance and fuel will have to pay a one-time MDR of ₹5 per transaction.
An MDR of 0.02 per cent will be applicable on payments to mutual funds and stock brokers, capped at ₹300.
Small traders with a monthly turnover of up to ₹1 lakh will be given mandatory zero MDR on all transactions.
UPI app providers are prohibited from charging platform fees or any hidden charges.
Banks have been advised to ensure that merchants do not pass on the burden of MDR charges for UPI payments to customers.
There will be no monthly quota or number limit on free UPI transactions for individuals.