Parliament on Monday passed the Taxation and Other Laws (Amendment) Bill, 2026, with Finance Minister Nirmala Sitharaman clarifying that the legislation does not impose any tax or transaction charge on UPI payments.
The Bill, which was passed by the Lok Sabha last week, was returned by the Rajya Sabha through a voice vote following a brief discussion and the Finance Minister’s reply.
Sitharaman said UPI would continue to remain free for consumers, as it has been since its launch.
“Will consumer pay any UPI charge — No. UPI has remained free for consumers since its launch and every Indian will continue to make this instant digital without paying any transaction charge,” she said.
The legislation seeks to delink the Payment and Settlement Systems Act from the Income Tax Act and provide legal backing to the government to modify the existing zero-MDR framework for UPI and RuPay card transactions.
Currently, banks and payment system providers cannot directly or indirectly charge users for transactions made through UPI and RuPay debit cards. The Bill empowers the central government to specify, through notification, the electronic payment modes or transactions that must remain free.
Beyond digital payments, the Bill aims to attract foreign capital, promote domestic electronics manufacturing and facilitate the use of Indian data centres by foreign cloud service providers by providing greater “process certainty”.
The Taxation and Other Laws (Amendment) Bill, 2026, replaces the June 5 ordinance that provided income-tax exemption on interest income and capital gains earned by foreign portfolio investors (FPIs) from investments in government securities.
The legislation also seeks to make it easier for fund managers to relocate to India by reducing the number of conditions funds must meet to ensure their global income is not taxed in India.
With PTI inputs
