Congress Alleges US Pressure Behind UPI MDR; Rahul Gandhi Demands Immediate Rollback
New Delhi: Even after the government insisted that the freshly notified merchant discount rate (MDR) on UPI is not a tax, Congress MP and Lok Sabha Opposition chief Rahul Gandhi on Wednesday called for its immediate withdrawal, branding it a “UPI tax” and alleging Prime Minister Narendra Modi surrendered to US President Donald Trump.
The new rules levy a 0.4% MDR on select person-to-merchant UPI payments exceeding ₹2,000, with the charge capped at ₹300 for transactions of ₹75,000 and above. Authorities have maintained that end-users will not foot the bill; the fee is to be absorbed within the payments ecosystem and distributed among banks, payment apps and other participants to keep UPI running and growing.
‘Modi Chose To Lie Down Before Trump’
As the controversy sharpened, the Centre on Wednesday rubbished suggestions that the decision was driven by foreign diktats. The Opposition, however, has claimed the move was designed to placate Trump.
Soon after the Finance Ministry’s clarification, Congress posted on X: “Narendra Modi weakened UPI under pressure from his friend Donald Trump and opened the way for American companies to earn from digital payments.”
Rahul Gandhi, in a separate post on X, invoked his grandmother, former Prime Minister Indira Gandhi, and said: “Indira ji was once asked whether she leans left or right and her response was, ‘I don’t take left, I don’t take right, I stand straight.’ Modiji has a completely different concept. He is neither left nor right. He has decided to lie down straight and prostrate himself in front of Donald Trump.”
He then alleged the step would siphon large sums to the US. “He has put a tax on every single Indian person by taxing UPI and giving huge amount of money to the United States. Modiji please stop lying down in front of the United States. Have a spine. Stand up and roll back the UPI tax.”
Centre: MDR Not A Tax, No Hidden Fees
The Finance Ministry countered that UPI policy is made independently and the system will remain free for users. In a social media statement, it said: “It is clarified that MDR is neither a tax nor a charge collected by the Government or NPCI. It is distributed among payment ecosystem participants, including banks and payment application providers, to support the operation and continued expansion of the UPI ecosystem.”
The ministry listed consumer safeguards, noting banks have been told merchants cannot shift the MDR burden to buyers. It added there would be no hidden fees and UPI apps would not be permitted to levy platform charges, as reported by India Today.
Rejecting claims of outside influence, it said assertions that the change stemmed from foreign pressure were false, and stressed India’s UPI decisions are being taken independently to build a “self-sustaining, inclusive and affordable digital payments ecosystem”.
‘Govt Lied On MDR’: Shrinate
Congress leader Supriya Shrinate said UPI needs about ₹20,700 crore a year to operate and asked why the government claimed there was no money for it. She pointed out that in FY 2025-26, the RBI gave ₹3 lakh crore surplus to the Centre, banks earned over ₹4.11 lakh crore profit, and NPCI made ₹1,888 crore pre-tax. “Just 7.2% of the RBI’s surplus is enough to run UPI,” she said.
She accused the government of misleading Parliament, noting Finance Minister Nirmala Sitharaman said on August 6 that “no decision has been taken on MDR” and on August 10 that “no framework for MDR has been finalized”. Yet, an MDR notification came on September 14. “Collecting from UPI means weakening UPI,” Shrinate said, repeating the charge that Modi weakened UPI under Trump’s pressure to help American firms.