New Delhi, 22 September 2026: National Payments Corporation of India (NPCI) on Tuesday clearly rejected the claims made in media reports that the Merchant Discount Rate (MDR) on UPI and the GST imposed on it will put additional burden on small traders. NPCIA has clarified that Rs. All Person-to-Merchant (P2M) UPI transactions up to Rs 2,000 will have zero MDR as before, hence there will be no impact of GST.
According to government figures, Rs. Transactions up to Rs 2,000 account for more than 96 per cent of the total UPI merchant transaction volume. This means that most UPI payments will remain outside the scope of MDR and GST.
NPCIA further stated that merchants with monthly UPI receipts of Rs. 1 lakh, they will also not have to pay any MDR. Therefore, there is no question of this change creating any financial burden for small traders. Additionally, if a trader pays GST on MDR, he can adjust the same against his other input tax credits, so that the trader does not have to bear additional cost.
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Rs. What are the rules for transactions of more than Rs 2,000?
The Finance Ministry had also earlier clarified that MDRA is not a government tax, but is an expense for the operation of the UPI network, banks and app providers. The rules under the new system will be as follows:
Rs. On transactions above Rs 2,000: 0.4 percent MDR will be applicable.
Maximum Capping: Rs. For large transactions of Rs 75,000 and above, the maximum limit of MDR is Rs 75,000 per transaction. 300 has been fixed.
Relief areas: In sectors like Railways, Telecom, Insurance, Fuel (Petrol Pump) and Agriculture, Rs. Only Rs.2,000 off on transactions above Rs.2,000. 5 No flat MDR will be applicable.
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Person-to-Person (P2P) transactions absolutely free
NPCI and the Finance Ministry have reiterated that person-to-person simple UPI transactions (P2P) will remain completely free, irrespective of the amount. Overall, more than 96% of consumers and small merchants will be completely free from rumors of digital payments on UPI becoming expensive.