Rahul Gandhi, BJP Trade Barbs Over New UPI Merchant Charges as Congress Calls It a 'Tax'

A fresh political slugfest broke out on Wednesday over the government's newly notified merchant discount rate on UPI transactions, with opposition leaders accusing the Centre of quietly taxing India's most popular digital payment rail even as the finance ministry insisted ordinary consumers would not feel the pinch.

The dispute centers on a framework notified by the central government on September 14, followed by an NPCI circular a day later, that introduces a 0.4 percent merchant discount rate, or MDR, on UPI payments made to merchants above Rs 2,000. Payments up to that threshold, along with all RuPay debit card transactions, remain free of charges under the new rules.

Congress Calls It a Tax, BJP Cries Foul

Congress leader Rahul Gandhi led the charge against the move, framing it as an "imposition" of fees on a payment system that has, until now, been free for both individuals and merchants. Congress general secretary Jairam Ramesh joined the criticism, linking the UPI charges to broader complaints about the Modi government's economic policy alongside ongoing tensions over US tariffs on Indian exports.

The BJP responded forcefully. Party MP Anurag Thakur defended the change, pointing to UPI's international recognition as a digital payments success story and its widespread adoption among small businesses and individual users across the country. The BJP accused Congress of spreading what it called "Jhooth ki Goonj," or an echo of lies, insisting the government had been unambiguous that no charges would apply to consumers making UPI payments.

NCP(SP) Adds to the Pressure

The criticism was not confined to Congress. NCP(SP) national spokesperson Clyde Crasto argued that even though the charge is technically levied within the merchant payment ecosystem, businesses would likely pass the additional cost on to customers in practice, effectively making it a hidden tax on everyday transactions. Crasto's remarks added a second flank of political pressure on the government beyond the Congress attack, complicating the BJP's messaging strategy.

What the Finance Ministry Says

The finance ministry has moved to draw a clear line between merchant-side charges and consumer-side costs. Officials reiterated that customers will not be required to pay any charge when making UPI payments, stressing that the MDR is a fee within the merchant payment ecosystem and not a charge levied on the person initiating the transaction. Person-to-person UPI transfers, the ministry said, will continue to attract zero charges irrespective of the amount transferred, a point NPCI has echoed in an FAQ sheet issued to address public confusion.

Separately, some trade bodies have weighed in with their own asks. Confederation of All India Traders secretary general Praveen Khandelwal has urged the Centre to exempt small merchants and consumers entirely from the new charge, arguing that even a modest MDR could squeeze thin-margin small businesses that rely heavily on digital payments.

Why This Matters

UPI processes billions of transactions a month across India, and any perceived change to its "free" status touches nearly every household and small business that has adopted digital payments over the past several years. The political stakes are correspondingly high: opposition parties see an opportunity to cast the move as a stealth tax that undercuts the government's own digital-payments success story, while the BJP is working to contain the narrative before it gains traction among small traders, a politically significant constituency.

With state elections and broader economic debates already dominating the political conversation, the UPI charge dispute is likely to remain a talking point in the coming days, particularly if trade associations continue pushing back publicly on the new fee structure.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.