India’s parliament passes a tax amendment bill affirming that Unified Payments Interface transactions will stay free for users, alleviating concerns over potential fees as the government aims to boost digital payment infrastructure and attract foreign investment.
India’s parliament has passed a tax amendment bill that the government says does not impose any charge on Unified Payments Interface transactions, ending fresh speculation about whether the country’s most widely used digital payment rail could face fees. Finance Minister Nirmala Sitharaman told the Rajya Sabha that consumers will not be asked to pay for UPI use and that the system will stay free at the point of use.
According to the government’s explanation, the legislation is mainly about creating legal and administrative flexibility around digital payments and related tax rules, not about levying a retail fee on UPI transfers. The bill also gives the central government scope to decide, by notification, which electronic payment modes must remain free, while separating the Payment and Settlement Systems Act from the Income Tax Act.
The clarification matters because UPI has become central to India’s digital payments ecosystem and any hint of charges tends to draw an immediate response from users and markets. Earlier this year, the government set aside ₹2,000 crore in the Union Budget to support the UPI and RuPay ecosystem, a move meant to offset payment companies’ costs and preserve the zero-fee model for consumers. The Reserve Bank of India has also said UPI remains free for users, reinforcing the official position that no charge is currently planned.
The wider bill goes beyond payments policy. Reuters reported that it replaces a June 5 ordinance granting tax relief on interest income and capital gains earned by foreign portfolio investors from government securities, and it is intended to make India more attractive to overseas capital. The government has also said it wants to offer greater certainty to foreign cloud firms using Indian data centres and to simplify rules for fund managers considering relocation to India.
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