UPI Charges Bill 2026 Passed By Lok Sabha: What Does It Mean for UPI Users?

The Taxation and Other Laws (Amendment) Bill, 2026, has been passed in the Lok Sabha and it amends the provisions regarding the digital payments under the Payment and Settlement Systems Act, 2007. It provides a mechanism through which the government may levy charges on some digital payment transactions using UPI and other notified payments.

This means that there is no immediate impact from the bill and any charges would only arise in accordance with a future notification by the government and corresponding rules.

What Is the New UPI Charges Bill?

The proposed legislation amends the current legislation regarding charges on digital payments.

Under the amendment, the Central Government has the power to prescribe which payment systems and transactions can remain free while which transactions would be liable to charges.

The Reserve Bank of India (RBI) will continue to regulate the payment systems and ensure the enforcement of rules.

The important thing about the bill is that it only makes it possible to impose UPI charges and does not impose the charges on all UPI transactions.

Who Will Be Affected by UPI Charges?

Small Shopkeepers and Street Vendors: May remain immune to charges subject to the final guidelines
Big Retailers and Online Platforms: May face MDR charges or others subject to being notified
Students and Salaried Individuals: Transfer from one individual to another is likely to remain free
Banks and Payment Service Providers: May get an additional revenue stream from transactions
Fintech Platforms: The firms running UPI may stand to gain from permissible charges

Are UPI Charges Applicable to Everybody?

No, Introduction of a structure for such charges does not imply everyone using UPI will start paying a charge.

Ultimately, it would depend upon what kind of transactions will be notified for the charge. For example, merchant transactions will be different from those between individuals.

For example, a transfer of ₹500 to a family member using UPI may continue to remain free while some large commercial transactions may face a fee if such charges are introduced by the government.

Why the Bill was Proposed?

UPI has emerged as one of the most popular digital modes of payment in India, recording billions of transactions each month. There are expenses incurred by banks, payment service providers, and fintech firms in relation to infrastructure, security, servers, transaction processing, and support services.

This regulatory mechanism would enable payment system operators to recoup some of their expenses via regulated fees where allowed.

On the other hand, the government can decide on the types of transactions which should be exempted to ensure consumer protection and facilitate digital payment.

UPI Transactions in July 2026

According to the numbers indicated in the report, there were 23.66 billion UPI transactions recorded in July 2026, amounting to ₹29.88 lakh crore in total transaction value.

Monthly number of transactions: 23.66 billion
Monthly transaction value: ₹29.88 lakh crore
Daily average transactions: 763 million
Daily average transaction value: ₹96,383 crore
YoY growth in transactions: 22%
YoY growth in transaction value: 19%

What Will Be the Changes for UPI Users?

In case the charges come via future notifications, the effect would depend on the nature and magnitude of the transaction.

Small value transactions: Transactions made for purchasing small items such as tea, grocery or taxi charges may either continue to be free or get a small amount of charge, based on the finalized rules.

High volume transactions: Transactions made for larger amounts in case of commercial entities may face more chances of being charged.

Business transactions: Business transactions to shops, firms and other commercial institutions may become one of those categories that may be charged.

Personal transactions: The transactions made among individuals such as friends and family members will most probably remain free.