The Lok Sabha has passed a Bill to amend the Payment and Settlement Systems Act, 2007, authorising the government to permit banks and other service providers to levy charges on payments made through the Unified Payments Interface (UPI) and other notified electronic payment modes.
The government’s approach aims to levy small charge on digital payment services for consumers and small businesses while ensuring a sustainable revenue model for banks, payment service providers (PSPs), and payment infrastructure firms that drive the digital payments ecosystem.
The amendment passed by the House seeks to remove the existing legal provision that prevents banks and payment service providers from charging Merchant Discount Rate (MDR) on notified electronic payment modes. While real-time payments made through RTGS and NEFT already attract service charges,
UPI transactions have so far remained exempt from such fees. The proposed changes in the Payment and Settlement Systems Act are a part of comprehensive legislation on taxation, which was introduced in the House on Tuesday.
The Bill was passed through a voice vote in the Lok Sabha after the House resumed at 2 pm after the earlier adjournment. As soon as the House reassembled, Finance Minister Nirmala Sitharaman moved the Taxation and Other Laws (Amendment) Bill, 2026, further to amend the Payment and Settlement Systems Act, 2007 and the Income Tax Act, 2025, and to amend the Finance Act, 2026, to be taken into consideration.
