NEW DELHI: As Rahul Gandhi stepped up his criticism of the government over the MDR announcement and demanded its rollback, calling it a “UPI tax”, a Standing Committee on Finance report had earlier emphasised the need for a viable revenue mechanism to ensure the UPI ecosystem remains financially sustainable without placing a perpetual burden on the government exchequer.The report was prepared by a committee that included Congress leaders, including former finance minister P Chidambaram.The Standing Committee on Finance, which includes Congress MPs such as P Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal and K Gopinath, in its report presented to Parliament on August 12 this year, called for a tiered MDR or revenue framework for UPI.The panel also said the framework should be notified and operationalised without delay.In its report, the Committee noted the “massive Rs. 2000 crore budgetary allocation for 2026-27 designed to offset ecosystem costs caused by the zero-MDR policy on RuPay and low-value UPI transactions”.The Committee observed that while UPI is projected to process up to 150 billion transactions a month and add 600 million new users, the current government incentive covers only 11% of the industry’s actual costs and 14% of potential MDR collections. It said this creates a structural funding gap that could affect long-term investment in infrastructure.“The Committee would like to emphasize that establishing a viable revenue mechanism is critical to ensuring the UPI ecosystem achieves financial sustainability without perpetually straining the Government exchequer,” the report said, as cited by ANI.“In the view of the Committee, while statutory enablement now exists to permit calibrated MDR on high-value transactions, any delay in notifying and operationalizing this framework leaves payment service providers heavily dependent on inadequate subsidies, thereby threatening critical investments in cybersecurity, fraud prevention, and network infrastructure,” it added.The report, headed by BJP MP Bhartruhari Mahtab, was adopted by the panel, and no dissent was recorded in the published minutes, officials were quoted as saying by news agency ANI.The development comes as Leader of Opposition in the Lok Sabha Rahul Gandhi on Wednesday attacked Prime Minister Narendra Modi over the Centre’s new Merchant Discount Rate (MDR) framework for Unified Payments Interface (UPI) transactions, accusing the government of yielding to pressure from the United States and urging Modi to “have a spine”.In a video posted on X, Gandhi referred to former Prime Minister Indira Gandhi while comparing her stance with Modi’s approach to the new UPI measures. “Indiraji was once asked whether she leans left or right, and her response was, ‘I don’t lean left or right. I stand straight’,” Gandhi said.
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He then turned to the new UPI framework, alleging that PM Modi had adopted a different approach.Meanwhile, the Centre has ruled out any rollback of the proposed 0.4 per cent Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions above Rs 2,000, saying the decision has already been taken and will come into effect from October 15.The government has clarified that the new UPI framework will have no impact on person-to-person transactions, which will continue to remain completely free, irrespective of the amount transferred.Payments to merchants of up to Rs 2,000, along with transactions covered under the zero-MDR framework for small merchants, will also remain free.The government also clarified that MDR is neither a tax nor a charge collected by the government or NPCI. Instead, it is distributed among payment ecosystem participants, including banks and payment application providers, to support the operation and continued expansion of the UPI ecosystem.
