Opposition demands immediate rollback of UPI fee move, govt says no question

The Opposition on Wednesday stepped up its attack on the government over UPI transaction charges, demanding an immediate rollback, even as the government made it clear there was no question of reversing the decision.

Ending nearly six years of fully free UPI payments, the government had on Tuesday introduced a 0.4 per cent fee on transfers worth more than Rs 2,000 made to merchants through the platform from October 15, while ring-fencing person-to-person transactions as well as small payments from any charge.

The finance ministry clarified on Wednesday that there was no foreign influence behind the decision to impose a 0.4 per cent MDR (Merchant Discount Rate) on UPI transactions above Rs 2,000.

"Some claims suggest the change is due to foreign influence. This is false. India's UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem," the finance ministry said in a post on X.

Leader of Opposition in the Lok Sabha Rahul Gandhi accused Prime Minister Narendra Modi of trying to please US President Donald Trump by imposing the charge.

The Congress alleged that the PM "redefined NOTA – Narendra's Ongoing Trump Appeasement". Gandhi urged the PM to "stop lying down in front of the US, have a spine, stand up" and roll back the "UPI tax".

"Modi ji, roll back the UPI tax. Now," Gandhi said in his post on X.

A top functionary, when asked whether the government was considering a rollback of the move, said a considered decision had been taken and there was no question of reversing it.

Sources said the decision to impose MDR charges was taken in the larger interest of the UPI ecosystem and to strengthen its safety and security.

The decision to levy charges, as prevalent in other countries, was taken at the time of introduction of the UPI system, sources said, adding that the new MDR framework would make the platform self-sustainable.

The decision evoked strong opposition from several quarters, including traders, shopkeepers and political parties who dubbed the move as 'Modi Tax'. Traders' associations said they would push for cash payments to avoid additional costs on digital payments.

"(Former prime minister) Indira (Gandhi) ji was once asked whether she leans left or right and her response was 'I don't lean left, I don't lean right, I stand straight'. Modi ji has a completely different concept, he is neither left nor right, he has decided to lie down straight and prostrate himself in front of Donald Trump," Rahul Gandhi alleged.

"He (Modi) has put a tax on every single Indian person by taxing UPI and giving a huge amount of money to the United States," Gandhi said in a video in which he is seen standing before a portrait of his grandmother Indira Gandhi.

Communist Party of India (CPI) general secretary D Raja demanded that the government withdraw the "anti-people decision".

"Charges on UPI usage, a publicly developed payment technology, are deeply unfortunate and have been brought under US pressure," Raja claimed in a post on X.

Congress general secretary-in-charge communications Jairam Ramesh asked whether the MDR was announced to enable US card companies to compete with UPI.

In a post on X, Ramesh said the US House of Representatives will on Thursday vote on a bill that proposes 100 per cent tariffs on India. The US Senate has already approved this draconian law, he pointed out.

Ramesh also took a swipe at the government while tagging a finance ministry post of June 2025, which stated that claims that the MDR would be charged on UPI transactions were completely false. "The U-turn Ustad owes an explanation for his somersault," he said.

"... the Modi government has given in to a US demand to get rid of zero MDR and charge for UPI. The US Trade Representative earlier this year criticised UPI for being free and having driven out Visa and Mastercard," Ramesh said, while raising the issue of Trump cracking down on Indian immigrants and making tougher laws against them.

Addressing a press conference, Congress spokesperson Supriya Shrinate said huge volumes of transactions happen through UPI, and PM Modi has once again decided to take money out of people's pockets.

Echoing the Congress sentiment, TMC MP Saugata Roy said levying a fee on UPI transactions would lead to an increase in the price of most commodities.

In Patna, RJD MP Manoj Jha flayed the government on the issue. "This is not a decision taken of their own accord, with their own wisdom. When we talk about American imperialism, this is like bowing down before it," he said.

Earlier, Parliament's Standing Committee on Finance, in its 32nd report, warned that the zero-MDR regime "puts pressure on government finances" and limits the ecosystem's ability to invest in long-term infrastructure. It had also urged that "establishing a viable revenue mechanism is critical to ensuring the UPI ecosystem achieves financial sustainability without perpetually straining the government exchequer".

The latest move signalled the end of an era for the world's largest real-time payments system even as the government tried to avoid alarming the hundreds of millions of daily users.- EndsPublished By: Vivek Published On: Sep 16, 2026 22:54 IST