Parliament Approves Taxation Bill Ensuring Free UPI Transactions

The Parliament has passed the Taxation and Other Laws (Amendment) Bill, which guarantees that UPI transactions will remain free for consumers. Finance Minister Nirmala Sitharaman clarified that there will be no charges imposed on UPI, ensuring that digital payments continue to be accessible for all Indians. The Bill also aims to attract foreign investment and enhance domestic electronics manufacturing. This legislation replaces a previous ordinance and modifies the existing framework for electronic payments, providing the government with the authority to determine which transactions should remain free. Read on to discover more about the implications of this significant legislation.

By Narendra Chaudhary Aug 11, 2026, 10:33 IST

Key Highlights of the Taxation Bill

File image of Union Finance Minister Nirmala Sitharaman (Photo: X)

New Delhi, Aug 11: The Taxation and Other Laws (Amendment) Bill has successfully passed through Parliament, with Finance Minister Nirmala Sitharaman emphasizing that this legislation will not impose any charges on UPI transactions, ensuring that digital payments remain free for users.

The Lok Sabha approved the Bill last week, and it was subsequently returned by the Rajya Sabha after a brief discussion and response from the Finance Minister.

Sitharaman confirmed, “Will consumers incur any charges for UPI? No. UPI has been free for users since its inception, and every Indian will continue to enjoy instant digital payments without transaction fees.”

This amendment replaces the ordinance issued on June 5, which granted tax exemptions on interest income and capital gains for Foreign Portfolio Investors (FPIs) in government securities.

The Bill aims to sever the connection between the Payment and Settlement Systems Act and the Income Tax Act, granting the government the authority to adjust the zero-MDR framework for UPI and RuPay card transactions.

Currently, banks and payment service providers are prohibited from charging users for UPI and RuPay debit card transactions. The new Bill will empower the Central government to determine, via notification, which electronic payment methods or transactions should remain free.

In addition to its primary goals, the government aims to attract increased foreign investment, boost domestic electronics manufacturing, and facilitate foreign cloud companies' use of Indian data centers by ensuring “process certainty.”