New Delhi [India], September 16 (ANI): Even as Rahul Gandhi has slammed the government and demanded roll back of the MDR announcement, terming it “UPI tax”, his own party leaders including former Finance Minister P Chidambaram were part of the Standing Committee on Finance report which emphasized that a viable revenue mechanism is critical to ensuring the UPI ecosystem achieves financial sustainability without perpetually straining the Government exchequer.
The Standing Committee on Finance includes Congress MPs including P Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal and K. Gopinath and in its report, presented to Parliament on August 12 this year, pressed for a tiered MDR or revenue framework for UPI while noting that it should be notified and operationalised without delay.
Report of the panel, headed by BJP MP Bhartruhari Mahtab, was adopted and no dissent has been recorded in the published minutes, officials said.
The Committee, in its report, noted the “massive Rs. 2000 crore budgetary allocation for 2026-27 designed to offset ecosystem costs caused by the zero-MDR policy on RuPay and low-value UPI transactions”.
The Committee observed that while UPI is expected to process up to 150 billion transactions per month and add 600 million new users, the current government incentive covers merely 11% of the industry’s actual costs and 14% of potential MDR collections, creating a structural funding gap impacting long-term infrastructural investment.
“The Committee would like to emphasize that establishing a viable revenue mechanism is critical to ensuring the UPI ecosystem achieves financial sustainability without perpetually straining the Government exchequer,” the report said.
According to the report, the Committee was deeply concerned by “the staggering mismatch between the Rs.2,000 crore allocation and the industry's estimated operational cost of Rs.20,700 crore”.
“In the view of the Committee, while statutory enablement now exists to permit calibrated MDR on high-value transactions, any delay in notifying and operationalizing this framework leaves payment service providers heavily dependent on inadequate subsidies, thereby threatening critical investments in cybersecurity, fraud prevention, and network infrastructure,” the report said.
Rahul Gandhi on Wednesday attacked the Modi government over the proposed transaction fee on UPI transactions and alleged that it was succumbing to US pressure. He also attacked Prime Minister Narendra Modi. BJP leaders slammed Rahul Gandhi over his allegations.
On its part, the government has made it clear that the new UPI framework introduced has no impact on any person to person transactions and consumers will face zero charges.
It has said that UPI will continue to remain completely free for all person-to-person transactions, irrespective of the amount transferred.
The government has said that payments to merchants up to Rs 2,000, along with transactions covered under the zero-MDR (merchant discount rate) framework for small merchants, will also remain free.
“Consequently, approximately 96% of all P2M transactions will remain unaffected. MDR will apply only to specified merchant transactions above ₹2,000,” Finance Ministry said on Tuesday.
The government clarified that MDR is neither a tax nor a charge collected by the Government or NPCI and is distributed among payment ecosystem participants, including banks and payment application providers, to support the operation and continued expansion of the UPI ecosystem. (ANI)
As Rahul Gandhi accuses government of “UPI tax”, his party MPs "backed" early operationalization of “calibrated MDR”
