# FM Rejects UPI MDR Misconception > FM Nirmala Sitharaman clarifies UPI MDR won't burden consumers. - Title: FM Rejects UPI MDR Misconception · The Economic Times - Summary: FM Nirmala Sitharaman clarifies UPI MDR won't burden consumers. Union Finance Minister Nirmala Sitharaman states UPI MDR charges above Rs 2,000 will not be… - Keywords: nirmala sitharaman, upi mdr, merchant discount rate, rs 2000, npci, indian banks association, gst council, fintech ecosystem, Rejects, UPI, MDR, Misconception - Source: The Economic Times — https://economictimes.indiatimes.com/industry/banking/finance/fm-nirmala-sitharaman-rejects-upi-mdr-misconception-says-charge-wont-be-passed-to-consumers/articleshow/134474227.cms - Author: ET Online - Published: 2026-09-25T03:31:00+00:00 - Read time: 1 min - Topics: nirmala sitharaman, upi mdr, merchant discount rate, rs 2000, npci, indian banks association, gst council, fintech ecosystem ## FM rejects UPI MDR misconception Union Finance Minister Nirmala Sitharaman dismisses opposition claims that UPI MDR charges above Rs 2,000 will burden consumers. > This is not a tax, this is not a cess, and it is not even a surcharge. ## MDR not government-imposed The MDR is collected by NPCI, merchant banks, and POS providers, not the government, and will not be passed to customers. > The collection is not going to the Consolidated Fund of India. ## 0.4% charge on transactions A 0.4% MDR applies to UPI payments above Rs 2,000, with a cap of Rs 300 for transactions over Rs 75,000. > The 0.4% charge on transactions above Rs 2,000 is a decision mutually agreed upon by banks. ## Comparison to card payments Sitharaman compares UPI MDR to card payments, noting merchants do not pass card MDR costs to consumers. > Even now, traders accept various cards: Visa, debit, or credit cards, on which an MDR is applicable, yet this cost is not passed on to the customer. ## Ministry ensures message holds The finance ministry will engage Indian Banks Association to prevent MDR charges from being passed to consumers. > We would talk to the IBA about the execution... Their members operate the POS machines. ## GST implications open Whether MDR itself attracts GST remains under discussion, with the GST Council to examine an 18% tax. > We expect the Council to be more inclined to be reasonable on this and take a favourable decision as this concerns the common man. ## MDR framework details Transactions up to Rs 2,000 and person-to-person UPI transfers remain exempt from MDR charges. > Transactions up to Rs 2,000 and all person-to-person UPI transfers remain exempt. ## Fintech ecosystem support The MDR charges help fund the fintech ecosystem, as government subsidies have been insufficient. > The subsidy the government provides to payment service providers has not been sufficient, the official added, and these charges are needed to help the fintech ecosystem develop further. ## What happens next The GST Council will review MDR tax implications ahead of its October 7 meeting, focusing on procedural relaxations. > No formal proposal on any tax rate change is on the agenda for the October 7 GST Council meeting. ## Key takeaway Union Finance Minister Nirmala Sitharaman states UPI MDR charges above Rs 2,000 will not be passed to customers, as the cost is handled by merchants and banks.