The Lok Sabha approved the Taxation and other Laws (Amendment) Bill, 2026 on 6 August 2026. The amendment removes the ban on banks and payment service providers (PSPs) from levying a MDR on transactions made through the UPI and other notified electronic modes.
Key Developments
- The bill was passed by voice vote after the House resumed at 2 p.m., with no debate due to opposition slogans.
- Finance Minister Nirmala Sitharaman moved the amendment to Section 10A of the Payment and Settlement Systems Act, 2007.
- The amendment substitutes the phrase “electronic modes of payment prescribed under section 269SU of the Income‑tax Act, 1961” with “one or more electronic modes of payment as the central government may, by notification, specify”.
- It aims to create a sustainable revenue model for banks, PSPs, and payment‑infrastructure firms while keeping digital payments affordable for consumers and small businesses.
Important Facts
Until now, Section 269SU required firms with turnover above Rs 50 crore to accept payments via RuPay debit cards and BHIM‑UPI QR codes, but banks could not charge any fee for these modes. Real‑time gross settlement (RTGS) and NEFT already attract service charges, but UPI transactions have been free of charge.
The RBI governor Sanjay Malhotra