INCOME TAX17 Sept 2026
UPI MDR explained: Flat ₹5, 0.40% or 0.02%? Know what applies to merchants, key sectors and capital markets
From 15 October 2026, UPI merchant discount rate, or MDR, will apply on digital payments. It is a fee paid by merchants, not customers. Person-to-person transfers stay free. Shop payments up to ₹2,000 also stay free. Above that, standard merchants pay 0.40%, capped at ₹300 once a payment hits ₹75,000. Railways, telecom, insurance and fuel pay a flat ₹5. Review your payment mix before then.
Key Statutory Highlights
- From 15 October 2026, standard person-to-merchant UPI payments above ₹2,000 will attract a 0.40% MDR, which is paid by the merchant.
- Person-to-person UPI transfers carry zero MDR, and person-to-merchant payments up to ₹2,000 also have zero MDR.
- Transactions of ₹75,000 or more have a maximum MDR of ₹300, while railways, telecom, insurance and fuel pay a flat ₹5 above ₹2,000.
Actionable Advice for Taxpayers / Founders:Review how much of your UPI collection comes from payments above ₹2,000 and how the new MDR may affect your margins from 15 October 2026. Check your exact sector rate with your bank or payment provider before then.
Statutory Disclaimer: TaxQue Shorts are AI-assisted editorial briefs for compliance awareness. This brief has not passed every source check; confirm the original notification before acting. This does not constitute formal legal or CA counsel.
TaxQue News Desk
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