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 confirmed that there will be no charges imposed on digital payments, ensuring that every Indian can continue to use UPI without incurring transaction fees. 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 payment methods should remain free. Read on for more details about the implications of this Bill.

By Narendra Chaudhary Aug 11, 2026, 11:03 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 clarifying that this legislation will not impose any charges on UPI transactions, ensuring that digital payments remain free for users.

This Bill, which received approval from the Lok Sabha last week, was subsequently returned by the Rajya Sabha after a brief discussion and response from the Finance Minister.

Sitharaman emphasized that there will be no charges for consumers using UPI, stating, “Will consumers pay any UPI charge? No. UPI has always been free for users since its inception, and every Indian will continue to enjoy instant digital payments without incurring transaction fees.”

The Taxation and Other Laws (Amendment) Bill, 2026, serves to replace the ordinance issued on June 5, which granted income tax exemptions on interest and capital gains earned by Foreign Portfolio Investors (FPIs) from investments in Government Securities.

This legislation aims to sever the connection between the Payment and Settlement Systems Act and the Income Tax Act, thereby 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 transactions made via UPI and RuPay debit cards. The new Bill will empower the Central government to determine, through notifications, which electronic payment methods or transactions should remain free of charge.

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.'