सुप्रीम कोर्ट ने UPI पर चार्ज लगाने का निर्णय समझाने हेतु केंद्र से आवेदन माँगा

BREAKING | Supreme Court Asks Centre To Explain Decision To Levy Charges On UPI Transactions, Refuses Stay

Debby Jain

28 Sept 2026 12:52 PM IST

The Government of India is not taking a single rupee of the charges, the Centre told the Court.

The Supreme Court on Monday called for an affidavit from the Union Government explaining the basis for the move to levy charges for transactions through Unified Payment Interface (UPI) above ₹2,000 from individuals to merchants.

A bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice V Mohana was hearing a writ petition filed by Advocate Anjan Datta challenging Gazette notifications issued by the Union Ministry of Finance on September 14 and 15, announcing charges on commercial UPI transactions above ₹2,000.

At the outset, Additional Solicitor General N Venkataraman, for the Union, submitted that the charges will take effect only on October 15. He said that 96% of the transactions will not face the charge, and the charges for essential services have been capped as Rs 5. "It is neither a tax nor a fee," ASG said.

"We need these facts on affidavit. It's more of a technical issue," CJI Surya Kant said.

"Is it tax or a fee? If not a fee, what is the executive basis for making this expropriation? What is the service?" Justice Bagchi sought to know.

"It is not an expropriation," ASG affirmed, adding that the Government of India was not taking a single rupee out of the charges, and it was a settlement fee between the payment aggregators and the banks. The ASG explained that there is a cost involved when the banks effect the electronic transactions, and credit/debit card transactions incur charges, and the UPI payments were exempted from those charges. However, the charges are necessary to keep the ecosystem working efficiently.

Justice Bagchi then referred to Section 269SU of the Income Tax Act which mandates merchants meeting the threshold turnover to provide electronic mode of payment facility to the customers.

"269 permits a transfer...if it permits transfer, so cash from one assessee moves to another...then what is the character of receipt. In UPI who gets it?...: We are not on the [coverage]. We are on legal incidence. What is the source of legal incidence of this?" Justice Bagchi sought to know.

When the bench issued notice to the Centre, the RBI and the NPCI, the petitioner's counsel sought a stay of the decision, contending that the move will give rise to increase in blackmoney transactions. The bench however refused to stay the decision.

The plea has been filed against the Union government, the Reserve Bank of India (RBI), the National Payments Corporation of India (NPCI) and the UPI & Services Steering Committee.

The petitioner contends that the imposition of charges on commercial UPI transactions could have a wider impact on the public, as businesses may pass on the additional costs to consumers.

The Union Government has introduced a framework permitting Merchant Discount Rate (MDR) charges on specified high-value commercial UPI transactions, while retaining free UPI payments for individuals and small merchants. The move follows amendments to the Payment and Settlement Systems Act, 2007, and notifications issued by the Ministry of Finance in September 2026.

The Finance Ministry's September 14 notification, issued under Section 10A of the Payment and Settlement Systems Act, specifies RuPay debit card payments and UPI transactions up to ₹2,000 as electronic modes on which banks and system providers cannot impose direct or indirect charges on persons making or receiving payments. The notification therefore protects transactions up to the specified threshold, rather than imposing a charge on every UPI payment.

The government subsequently clarified that the new framework would preserve free person-to-person (P2P) transactions irrespective of the amount transferred. It also stated that payments to merchants up to ₹2,000 and transactions covered by the zero-MDR framework for small merchants would remain free.

Merchant Discount Rate is a fee associated with processing a merchant payment. It is collected within the payment ecosystem and distributed among participating entities, such as banks and payment service providers. It is not a tax collected by the Government or NPCI.

Under the announced framework, the MDR will apply to specified person-to-merchant (P2M) UPI transactions above ₹2,000. The standard rate is 0.4%, with a maximum charge of ₹300 for transactions of ₹75,000 or more. Certain essential and thin-margin sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, will attract a flat MDR of ₹5 for transactions above ₹2,000. Capital market transactions will attract a lower rate of 0.02%, capped at ₹300.

The announced framework places the MDR within the merchant payment ecosystem. The Finance Ministry has advised banks to ensure that merchants do not pass the charge on to consumers. UPI application providers have also been prohibited from imposing platform fees or hidden charges on users under the framework.

The government has said that approximately 96% of merchant transactions will remain unaffected, either because they fall below ₹2,000 or are covered by zero-MDR provisions for small merchants. Small merchants receiving up to ₹1 lakh per month through UPI QR codes under the P2PM category will continue to enjoy zero MDR.

Case : Anjan Datta v. Union of India | WP(c) Diary No. 57387/2026

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