Guwahati: Parliament has passed the Taxation and Other Laws (Amendment) Bill, 2026, with Finance Minister Nirmala Sitharaman clarifying that the legislation does not introduce any tax or transaction fee on Unified Payments Interface (UPI) payments.
The Bill, which was approved by the Lok Sabha last week, was passed by the Rajya Sabha through a voice vote following a brief debate and the Finance Minister’s response.
Sitharaman assured consumers that UPI transactions would continue to remain free. She said the digital payment system has not carried a consumer transaction charge since its introduction and that this arrangement would continue.
The Taxation and Other Laws (Amendment) Bill, 2026 replaces an ordinance issued on June 5. The ordinance provided income-tax exemptions on interest income and capital gains earned by Foreign Portfolio Investors (FPIs) from investments in government securities (G-Secs).
One of the key provisions of the legislation seeks to delink the Payment and Settlement Systems Act from the Income Tax Act. It also provides a legal framework for the government to modify the existing zero-Merchant Discount Rate (MDR) system for UPI and RuPay card transactions.
Currently, banks and payment system providers are prohibited from directly or indirectly imposing charges on users for transactions made through UPI and RuPay debit cards. The amended law would empower the Centre to specify, through notification, electronic payment modes or categories of transactions that must remain free for users.
The legislation also contains measures aimed at encouraging foreign investment, strengthening domestic electronics manufacturing and facilitating greater use of Indian data centres by foreign cloud service providers.
The government has said the measures are intended to provide greater regulatory certainty and support investment and digital infrastructure in India.