The Congress party criticised the Indian government for introducing a 0.4% transaction fee on UPI payments exceeding Rs 2,000, labeling it a “Modi tax.”
Photo : PTI
The Congress, on Tuesday, hit out at the Centre over imposing transaction fee on UPI payments above Rs 2000 for merchants, terming the latest move of the government as “Modi tax”. Leader of Opposition (LoP) Rahul Gandhi also targeted the Centre and alleged that Prime Minister Narendra Modi was “compromised” and “once again surrendering” to American pressure.
Congress said the sequence of events on the UPI transaction issue shows that it is another example of the Modi government’s “FAST (First Announce, Subsequently Think) move”.
Tomorrow, the US House of Representatives votes on a Bill that introduces 100% tariffs on India. The US Senate has already approved this draconian law.
Meanwhile, the Trump regime has been cracking down on Indian immigrants and making tougher laws against them. H-1B visa costs have been increased and such holders could soon be deported immediately when out of a job. Such holders are mostly IT professionals.
Here, the Modi Govt has given into a US demand to get rid of zero MDR and charge for UPI. The U.S. Trade Representative earlier this year criticized UPI for being free and having driven out Visa and Mastercard.
Why 0.4% MDR? Is it because debit card MDR is also 0.4%? Is this being done to enable US card companies to compete with UPI?
Is this going to make UPI “sustainable” as the Govt claims? The estimated cost of running the entire UPI ecosystem is around Rs 20,000 crore annually. This is less than 10% of what the RBI has been transferring to the Union Govt in the past few years so as to show healthy public finances for the Modi Govt.
The PM has redefined NOTA— Narendra’s Ongoing Trump Appeasement.
— Jairam Ramesh (@Jairam_Ramesh) September 16, 2026
UPI Fee To Be Imposed From October 15
The criticism comes after the government earlier on Tuesday set a 0.4 per cent charge on UPI payments above Rs 2,000 to merchants and capped the fee at Rs 300 for payments of Rs 75,000 and above as it rolled out a framework for large digital merchant payments.
The move ends the zero-MDR (Merchant Discount Rate) regime that has been in place since January 2020, introduced to drive digital payments adoption but long criticised by banks and fintechs as unsustainable.
Railways, Telecom, Fuel Sectors To Face Impact
Essential sectors like railways, telecom and fuel get a flat Rs 5 fee per transaction, while capital markets get a lighter 0.02 per cent rate.
Soon after the government’s statement on Tuesday, Congress general secretary in-charge communications Jairam Ramesh said, “Decision Making in Modi Govt — Aug 6: Finance Minister says ‘no decision has been taken on MDR’. Aug 10: FM in Parliament says ‘No MDR framework has yet been finalised’. Sep 14: Notification is issued. Within 24 hrs, MDR charges introduced.” “Another example of Modi Govt’s FAST moves (First Announce, Subsequently Think),” Ramesh said.
‘Modi Tax,’ Says Pawan Khera
Congress’ media and publicity department head Pawan Khera said the 0.4 per cent MDR on UPI transactions above Rs 2,000 should be called the “Modi Tax”.
“He popularised UPI, wanted all the credit for building a ‘cashless economy’ — and now he is taxing people for using it,” Khera said on X.
Loot Has Now Reached UPI, Says Kharge
Earlier in the afternoon, Congress president Mallikarjun Kharge said the Modi government’s “loot” has now reached UPI.
“‘No fees on UPI’ has been changed to ‘no fees on UPI transactions up to Rs. 2,000’. Sky-high inflation has already emptied the common person’s pocket. Wholesale inflation is near 10%, and the BJP government has planned to impose a ‘Digital Payments Tax’ on the public, aiming to destroy whatever little savings they have left,” Kharge said in a post in Hindi on X.
“Behold the Modi government’s biggest flip-flop — Ten years ago, demonetisation delivered a shock to the country’s economy. When questions were raised about the disastrous outcomes of demonetisation, the government argued that it was imposed to promote Digital Payments and a Cashless Economy,” he said.
Speaking of MDR, doesn’t the government know that this additional burden on merchants will ultimately be recovered from the common consumer’s pocket through price hikes, Kharge asked.
“Instead of providing relief to the inflation-weary public, the Modi government is searching for a new way every day to rob their pockets!!” the Congress chief said.
Rahul Gandhi Alleges PM Modi Again ‘Surrendering To American Pressure’
In a post in Hindi on X, Rahul Gandhi alleged that the Modi government has quietly paved the way for imposing fees on UPI.
“Now, MDR can be levied on merchant UPI transactions above Rs 2,000. Even if these transactions account for just 5 per cent of the volume, they make up nearly 65% of UPI’s total transaction value,” Gandhi said.
“The government says no fees will be charged to customers. But where will the fees imposed on shopkeepers ultimately come from? Added to the prices, straight out of the customer’s pocket,” the Leader of Opposition in the Lok Sabha said.
American payment companies have long opposed India’s zero-MDR policy, Gandhi said. Now, the Modi government has opened the path to changing the policy in exactly that direction, Gandhi claimed.
“Just like with the US Trade Deal, Compromised PM Modi is once again surrendering to American pressure,” the former Congress chief alleged.
In his earlier post, Congress general secretary Ramesh said, “Just as we warned on August 6, 2026, to which the Hon’ble FM herself had deemed it fit to respond, the Modi Government is now using new laws bulldozed through Parliament to start the process of charging for UPI.” “A notification has just been issued under the amended Payment and Settlement Systems Act, 2007 that prohibits banks and providers from charging only for UPI transactions under Rs 2000. But there is NO explicit protection for any transaction above this cap,” Ramesh said on X.
The stage is clearly being set for all of us to pay a fee for UPI transactions, he claimed.
“Tomorrow the cap itself might be changed with another such notification – there is no longer a guarantee in the law. For all we know, the government can introduce a charge for daily person-to-person transactions as well,” Ramesh said.
“The Modi government has yet again shown complete lack of honesty and transparency and has broken the trust of users. Is all of this being done to open digital payments for American companies to appease President Trump?” the Congress general secretary said.