The government appears to be imposing another burden on citizens through the proposed 0.4% tax on UPI transactions above Rs 2,000 from October 15, 2026.
The irony is that the government spent years encouraging citizens to shift from cash to UPI, highlighting its convenience and efficiency. Now that UPI has become integral to everyday transactions, users are being asked to bear additional costs under the justification of MDR or related charges.
Why cannot the government absorb this cost or provide a tax exemption for UPI transactions? Passing the burden to consumers could encourage a return to cash and undermine the objective of promoting digital payments.
Citizens already face various taxes and charges. Instead of imposing additional costs on widely used digital payments, the government should explore other avenues to raise revenue without disproportionately burdening ordinary citizens.
Any new UPI charge should also be assessed for its impact on consumers, small businesses and the wider digital economy. Policies affecting everyday transactions and household expenses must be transparent and carefully considered.
UPI has become a vital part of India’s payment infrastructure. Rather than discouraging its use through additional charges, policymakers should ensure that digital payments remain affordable and accessible. The proposed 0.4% charge therefore deserves reconsideration. The government should withdraw the proposed tax and protect consumers from another avoidable financial burden.
SRINIVAS KAMAT, Mysore
