The path to imposing charges on Unified Payments Interface (UPI) transactions appears to be clearing; however, 71 percent of the total transaction value may remain exempt from these charges. A bill seeking to amend tax-related regulations was passed by the Lok Sabha on Thursday.
However, the bill does not specify the types of UPI transactions or the transaction amounts that would attract charges. Experts and the Ministry of Finance state that these details will be determined by the RBI and the National Payments Corporation of India (NPCI).
No Charges On Person-To-Person Transactions
Sources indicate that no charges will be levied on person-to-person (P2P) UPI transactions. Charges may be applicable to person-to-merchant (P2M) or merchant-to-merchant transactions.
The bill does not mention what the charge rates will be. While neither the RBI nor the NPCI has made a decision on this yet, experts suggest that UPI charges will apply to only a very small fraction of transactions.
According to Ministry of Finance data, a total of 24,161.69 crore transactions were conducted via the UPI platform in the 2025-26 financial year, with a reported total value of ₹314 lakh crore.
Ministry of Finance figures reveal that 71 percent of this ₹314 lakh crore value came from P2P transactions transfers between two individuals which are expected to remain exempt from charges. The remaining 29 percent of the transaction value was attributed to person-to-merchant (P2M) transactions.
Charges To Apply On UPI Payments Exceeding ₹2,000
Ministry of Finance data indicates that in the last financial year, only four percent of total person-to-merchant transactions exceeded the ₹2,000 mark. In the person-to-merchant (P2M) category, 59 percent of transactions fell within the ₹0–₹500 range. Sources indicate that UPI payments exceeding ₹2,000 will attract a fee.
According to Ministry of Finance data, 59 percent of total person-to-person (P2P) transactions in the last financial year were valued between ₹0 and ₹500.
Transactions exceeding ₹2,000 accounted for 20 percent of total P2P transactions. Since P2P transactions are intended to remain fee-free, they will not be affected.
What Does The Bill Entail?
The bill seeks to amend the Payment and Settlement Systems Act, 2007; currently, banks and financial institutions are prohibited from levying charges on UPI transactions.
Industry experts state that banks incur an annual cost of approximately ₹10,000 crore to operate UPI services.
Currently, over 700 banks and financial institutions provide UPI services. Sources suggest that the revenue generated from fees would help banks strengthen the UPI transaction system, enabling them to allocate funds toward enhancing cybersecurity for these transactions.
