The Bill, which was passed by the Lok Sabha last week, was cleared by the Rajya Sabha through a voice vote after a brief discussion and Sitharaman’s reply. The Finance Minister reiterated that UPI would 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 a legal framework for the government to modify the existing zero-MDR regime for UPI and RuPay card transactions.
At present, banks and payment system providers cannot directly or indirectly charge users for transactions made through UPI and RuPay debit cards. The Bill empowers the Centre to specify, through notification, the electronic payment modes or transactions that must remain free.
Last week too, FM Sitharaman had clarified in Parliament that UPI transactions would remain free for consumers, amid concerns that the government’s proposed changes could lead to charges on users.
What does the Bill mean for UPI charges?
The legislation does not impose a UPI transaction charge on consumers. Instead, it creates the legal framework through which the government can specify which electronic payment modes or transactions should remain free.
The distinction is important amid the recent debate over the Merchant Discount Rate (MDR) and who should bear the cost of running India’s digital payments infrastructure.Beyond UPI, the Bill aims to attract foreign capital, promote domestic electronics manufacturing and facilitate greater use of Indian data centres by foreign cloud service providers by providing greater “process certainty”.
What else does the Taxation and Other Laws Bill propose?
The Bill 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.
It 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.
The legislation was passed by both Houses of Parliament on Monday.
(WIth Agency Inputs)
