INCOME TAX25 Sept 2026
UPI MDR: Where will 0.4% fee go? FM clarifies banks, payment gateways & apps to get a share | Check breakdown | Mint
From 15 October 2026, a 0.4% Merchant Discount Rate applies to person-to-merchant UPI payments above ₹2,000, and merchants pay it. Banks, payment gateways and UPI apps share the money, with 40% going to customer banks. Banks must not pass the charge to customers. Small merchants earning up to ₹1 lakh a month stay at zero MDR. Check your monthly UPI collections.
Key Statutory Highlights
- From 15 October 2026, a 0.4% MDR applies to specified person-to-merchant UPI transactions above ₹2,000, capped at ₹300 for transactions of ₹75,000 or more.
- Of the MDR collected, 40% goes to customers' banks, 30% to payment gateways, 20% to the UPI app and 10% to the UPI app's sponsoring bank.
- Person-to-person UPI transfers stay free, merchant payments up to ₹2,000 remain outside MDR, and small merchants receiving up to ₹1 lakh a month keep zero-MDR treatment.
Actionable Advice for Taxpayers / Founders:If you are a merchant accepting UPI payments above ₹2,000, review your pricing and payment records before 15 October 2026 and speak to your CA about how the 0.4% MDR should be booked, while noting that banks have been advised not to pass it on to customers.
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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