Finance Minister Nirmala Sitharaman introduced the Taxation and Other Laws Amendment Bill on Tuesday. It has a provision to remove the restriction on banks and payment service providers from charging MDR on electronic payment modes. However, it is not yet decided when the MDR charge will be levied. According to media reports, setting a limit of Rs 2000 will cover only 5% of UPI transactions. Reports quoting sources have said that MDR fee will not be levied on UPI payments for everyday shopping or transportation. Apart from this, if a person sends money to another person through UPI, this charge will also not be levied.
This clearly shows that 95% of transactions through UPI will not be subject to MDR charges. In July, people made 23.7 billion transactions through UPI. It is the largest digital payment system. Maintaining this system costs a lot. Because of this, payment service providers have requested the government to set a certain limit on MDR charges for UPI transactions. If MDR is implemented, it will not affect ordinary people, but those involved in large businesses will have to pay a charge on UPI payments.