President Droupadi Murmu assented to the Taxation and Other Laws (Amendment) Act, 2026 on August 17, 2026. The Act further amends the Payment and Settlement Systems Act, 2007. The Ministry of Law published the Act in the Gazette of India, Extraordinary, on the same date.
The amendment replaces the reference in Section 10A to the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961 with the words 'one or more electronic modes of payment as the Central Government may, by notification, specify'. Under the previous wording, banks and payment-system providers could not charge users for payments made through UPI and RuPay debit cards. The Act gives the government legal backing to modify the zero-MDR framework on UPI and RuPay card transactions by notification.
Parliament passed the bill after the Rajya Sabha returned the Money Bill to the Lok Sabha following discussion, Akashvani reported on August 11, 2026. As a Money Bill, the legislation allowed the Rajya Sabha only to make recommendations on its provisions and return it to the Lok Sabha. Finance Minister Nirmala Sitharaman told the house that the UPI-related amendment is only an enabling provision. She said the legislation does not impose any tax on UPI. She said the government does not intend to impose any MDR charges on small merchants.
A PTI report carried by Deccan Chronicle on August 18 said the UPI and Services Steering Committee headed by NPCI will now decide on the MDR charges. The same report said any future merchant discount rate will apply only to certain categories of merchant transactions.