NEW DELHI: Govt is likely to allow a levy of 0.25% to 0.4% as merchant discount rate (MDR) or charges on UPI payments above Rs 2,000 made to businesses, while keeping payments made by one person to another outside the ambit.The Taxation and Other Laws (Amendment) Bill, moved by FM Nirmala Sitharaman on Tuesday, has sought to remove the bar on banks and payment service providers to levy MDR on notified electronic payment modes. Govt officials said there is no decision on when the proposal will be implemented.Official estimates show that the Rs 2,000 floor will cover 5% of all UPI transactions, but those transactions account for 65% of the total transaction value, and is unlikely to impact daily purchases such as milk, vegetables and groceries or even payments for auto or taxi use. In July, there were 23.7 billion transactions, whose combined value was pegged at Rs 29.9 lakh crore.”Even if implemented, 95% of the transactions will not face the merchant discount rate. Besides, not all businesses are going to pass on the fees, which will be a small amount,” an official said.Join conversationView All Comments →Share your thoughts in the commentsInsightfulAgreeDisagreeSkepticalConcerningPromisingWorth ReadingBig DevelopmentPost CommentBe respectful · TOI community guidelinesIndustry persons said govt may likely impose a ceiling on the absolute amount that is charged. “Unlike credit cards, there is no funding cost involved so it makes sense to have a ceiling once the costs are covered,” said an industry source.At present, credit and debit cards come with MDR, but most merchants do not pass it on to consumers. In the case of credit card MDR, where the fee is not regulated, it can be as high as 3% of the transaction value. For debit card transactions up to Rs 20 lakh, there is a cap of 0.4%, and for higher value it is 0.9%.Get the latest India News and Live updates. Download the TOI app.End of ArticleFollow Us On Social MediaVideosSecurity On High Alert: Pak Drone Sighted In Jammu On Eve Of Article 370 Abrogation AnniversaryNot A Single Woman In Karnataka Cabinet? Congress Faces Tough QuestionsExplained: Why Jharkhand Students Are Distancing Their JPSC Protest From The Jantar Mantar AgitationGovernment Proposes V2V Technology To Enable Real-Time Vehicle Communication For Better Road Safety’Cannot Tear Open My Chest’: Jharkhand CM Hemant Soren’s First Reaction To JPSC Student Protest’Thought We Would Die’: Air India Phuket-Delhi Flight Hit By Violent Turbulence, Several InjuredNHAI Forced Into U-Turn After Posting Wrong Pic Of Rajasthan’s NH-25; Project Director SuspendedUdhayanidhi Stalin Released Hours After Arrest Over ‘Double Meaning’ RemarkSC Extends Section 498A Protection To Women In Marriage-Like Live-In RelationshipsWhatsApp Puts Multiple Accounts Under Review, Users Locked Out As Company Admits Mistakes Can Happen123PhotostoriesThe first date was amazing. So why wasn’t there a second? 9 reasons it happens more often than you think12 dhaba-style potato dishes that are perfect for lunch and dinnerWant siblings who stay close for life? These everyday parenting habits can make all the difference10 baby boy names inspired by kings and royaltyTamannaah Bhatia turns heads with 3 dramatically different looksBleeding gums may be warning you about more than your teeth: Doctor explains the link to heart disease, stroke and diabetesOptical illusion brain teaser: You might be a record breaker if you spot the ‘blue-eyed fox’ among the browns in this jungleThe way you react today becomes your child’s inner voice tomorrow: 7 everyday moments that shape your child’s future more than any parenting advice ever could13 iconic ice creams from around the world every dessert lover should tryHow to talk to toddlers to nurture intelligence: Science-backed tips123Hot PicksCJP nationwide tourGold Rate TodayMJPRU resultBSE SensexRBI FD ruleManmohan Singh LiberhanKarnataka cabinet expansionUdhayanidhi StalinD Y PatilTop TrendingFaridabad MurderUdhayanidhi StalinPanchkula Army Captain Wife DeathPappu Yadav Slipper AttackPM ModiKarnataka Cabinet ExpansionTrisha KrishnanD Y Patil DeathBypoll Election Result 2026Shradha Singh
NEW DELHI: Govt is likely to allow a levy of 0.25% to 0.4% as merchant discount rate (MDR) or charges on UPI payments above Rs 2,000 made to businesses, while keeping payments made by one person to another outside the ambit.The Taxation and Other Laws (Amendment) Bill, moved by FM Nirmala Sitharaman on Tuesday, has sought to remove the bar on banks and payment service providers to levy MDR on notified electronic payment modes. Govt officials said there is no decision on when the proposal will be implemented.Official estimates show that the Rs 2,000 floor will cover 5% of all UPI transactions, but those transactions account for 65% of the total transaction value, and is unlikely to impact daily purchases such as milk, vegetables and groceries or even payments for auto or taxi use. In July, there were 23.7 billion transactions, whose combined value was pegged at Rs 29.9 lakh crore.“Even if implemented, 95% of the transactions will not face the merchant discount rate. Besides, not all businesses are going to pass on the fees, which will be a small amount,” an official said.
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Industry persons said govt may likely impose a ceiling on the absolute amount that is charged. “Unlike credit cards, there is no funding cost involved so it makes sense to have a ceiling once the costs are covered,” said an industry source.At present, credit and debit cards come with MDR, but most merchants do not pass it on to consumers. In the case of credit card MDR, where the fee is not regulated, it can be as high as 3% of the transaction value. For debit card transactions up to Rs 20 lakh, there is a cap of 0.4%, and for higher value it is 0.9%.
