✎ UPI transactions may soon attract MDR charges as per government notification under amended Payment and Settlement Systems Act.

Relevance for Banking, SSC & RBI Grade B exams: Polity

The Lok Sabha recently passed the Taxation and Other Laws (Amendment) Bill, 2026, which amends the Payment and Settlement Systems Act, 2007, to allow banks and payment service providers to charge Merchant Discount Rate (MDR) on UPI and RuPay card transactions. Currently, UPI transactions are free for consumers, but the amendment removes the legal barrier preventing banks from levying charges, potentially introducing costs for merchants and altering the digital payments ecosystem. The government justified this move as necessary to create a sustainable revenue model for banks and payment providers, ensuring the growth of digital payments infrastructure. For banking and SSC aspirants, this change highlights the evolving regulatory framework governing digital transactions, a key topic in financial governance and monetary policy discussions.

The Bill also includes provisions to attract foreign capital by exempting interest income and capital gains of Foreign Portfolio Investors (FPIs) from investments in Government Securities (G-Secs), aligning with the government’s goal of making India a more attractive destination for global investors. Additionally, it simplifies tax compliance for fund managers relocating to India, including those in International Financial Services Centres (IFSCs), by reducing conditions for tax exemption on global income. For RBI Grade B aspirants, this reflects the central bank’s focus on capital inflows, monetary policy, and financial sector reforms, while SSC candidates should note the broader implications for economic policy and international financial regulations.

Source: Mint

Generated by AanyaAi for educational purpose.