Congress Denies Support for UPI Tax Amidst Government Claims: What’s Really Happening?

Congress Pushes Back Against UPI Tax Claims

New Delhi: On Thursday, the Congress party refuted allegations that its members on the Parliament Standing Committee on Finance endorsed the imposition of a fee on high-value UPI transactions. They accused the Modi administration of attempting to distract from the significant backlash following the UPI tax announcement.

This statement from the opposition came after the government questioned Rahul Gandhi's criticism of the UPI fee for transactions exceeding Rs 2,000, asserting that a parliamentary committee had supported such a measure.

A senior official from the government indicated that the Parliamentary Standing Committee on Finance had advocated for a tiered Merchant Discount Rate (MDR) framework for UPI and urged its prompt implementation.

Five Congress MPs, including P Chidambaram and Manish Tewari, were present during the adoption of the report on August 12, with no dissent noted in the official minutes, according to a BJP official.

However, Gogoi from Congress dismissed these claims, stating that the committee did not deliberate on the UPI tax proposal recently introduced by the Modi government.

He further mentioned that the Department of Finance had not presented any specific UPI tax proposal during their discussions with the finance committee members.

Concerns were raised regarding the necessity of the MDR, but government representatives failed to provide satisfactory answers at that time, Gogoi added.

He reiterated that the new UPI tax policies adversely affect small Indian merchants and entrepreneurs while benefiting large American corporations. He urged PM Modi to roll back the UPI tax.

In a related post, Congress communications head Jairam Ramesh remarked that the Modi government's attempts to divert attention from the backlash against the UPI tax decision were transparent.

Congress MP Manish Tewari also criticized the government, stating that parliamentary committee proceedings, which should be privileged, are being misused for political gain.

Gaurav Gogoi emphasized that no specific proposal regarding the recent MDR on UPI transactions was ever presented to the Parliamentary Standing Committee, including details on the fee structure and exemptions.

Tewari noted that concerns about the MDR's necessity and effectiveness were raised during various committee meetings.

He argued that claiming support from 'certain members' of the committee misrepresents the confidential nature of parliamentary proceedings.

In response to the government's decision to impose a fee on UPI payments over Rs 2,000, Rahul Gandhi accused PM Modi of capitulating to US interests and called for a rollback of the fee.

According to the standing committee's report led by BJP MP Bhartruhari Mahtab, the panel reiterated its earlier recommendation for a viable revenue model, advocating for legislative provisions for a tiered MDR structure.

However, the committee expressed serious concerns about the significant disparity between the Rs 2,000 crore allocation and the industry's estimated operational costs of Rs 20,700 crore.

The committee warned that delays in implementing this framework could leave payment service providers reliant on insufficient subsidies, jeopardizing crucial investments in cybersecurity and infrastructure.

Regarding the incentive scheme for promoting RuPay debit cards and low-value BHIM-UPI transactions, the committee noted the substantial Rs 2,000 crore budget for 2026-27 aimed at offsetting costs from the zero-MDR policy.

The committee highlighted that while UPI is projected to handle up to 150 billion transactions monthly and attract 600 million new users, the current government incentives only cover a fraction of the industry's actual costs, creating a significant funding gap that could hinder long-term infrastructure investments.

The committee recommended that while the proposed multi-year scheme and cashback initiatives are essential for expanding digital payments in underserved regions, the Department of Financial Services should also pursue a self-sustaining, tiered revenue model.