The Congress, on Tuesday, hit out at the Centre over imposing transaction fee on UPI payments above Rs 2000 for merchants. The principal opposition party
termed the latest move of the government as "Modi tax". LoP Rahul Gandhi also targeted the Centre and alleged that Prime Minister Narendra Modi was "compromised" and "once again surrendering" to American pressure. Congress said the sequence of events on the UPI transaction issue shows that it is another example of the Modi government's "FAST (First Announce, Subsequently Think) move". The criticism comes after the government earlier today set a 0.4 per cent charge on UPI payments above Rs 2,000 to merchants and capped the fee at Rs 300 for payments of Rs 75,000 and above as it rolled out a framework for large digital merchant payments. The move ends the zero-MDR regime that has been in place since January 2020, introduced to drive digital payments adoption but long criticised by banks and fintechs as unsustainable. Essential sectors like railways, telecom and fuel get a flat Rs 5 fee per transaction, while capital markets get a lighter 0.02 per cent rate. Soon after the government's statement on Tuesday, Congress general secretary in-charge communications Jairam Ramesh said, "Decision Making in Modi Govt -- Aug 6: Finance Minister says 'no decision has been taken on MDR'. Aug 10: FM in Parliament says 'No MDR framework has yet been finalised'. Sep 14: Notification is issued. Within 24 hrs, MDR charges introduced." "Another example of Modi Govt's FAST moves (First Announce, Subsequently Think)," Ramesh said. Congress' media and publicity department head Pawan Khera said the 0.4 per cent MDR on UPI transactions above Rs 2,000 should be called the "Modi Tax". "He popularised UPI, wanted all the credit for building a 'cashless economy' -- and now he is taxing people for using it," Khera said on X. Earlier in the afternoon, Congress president Mallikarjun Kharge said the Modi government's "loot" has now reached UPI. "'No fees on UPI' has been changed to 'no fees on UPI transactions up to Rs. 2,000'. Sky-high inflation has already emptied the common person's pocket. Wholesale inflation is near 10%, and the BJP government has planned to impose a 'Digital Payments Tax' on the public, aiming to destroy whatever little savings they have left," Kharge said in a post in Hindi on X. "Behold the Modi government's biggest flip-flop -- Ten years ago, demonetisation delivered a shock to the country's economy. When questions were raised about the disastrous outcomes of demonetisation, the government argued that it was imposed to promote Digital Payments and a Cashless Economy," he said. Speaking of MDR, doesn't the government know that this additional burden on merchants will ultimately be recovered from the common consumer's pocket through price hikes, Kharge asked. "Instead of providing relief to the inflation-weary public, the Modi government is searching for a new way every day to rob their pockets!!" the Congress chief said. In a post in Hindi on X, Gandhi alleged that the Modi government has quietly paved the way for imposing fees on UPI. "Now, MDR can be levied on merchant UPI transactions above Rs 2,000. Even if these transactions account for just 5 per cent of the volume, they make up nearly 65% of UPI's total transaction value," Gandhi said. "The government says no fees will be charged to customers. But where will the fees imposed on shopkeepers ultimately come from? Added to the prices, straight out of the customer's pocket," the Leader of Opposition in the Lok Sabha said. American payment companies have long opposed India's zero-MDR policy, Gandhi said. Now, the Modi government has opened the path to changing the policy in exactly that direction, Gandhi claimed. "Just like with the US Trade Deal, Compromised PM Modi is once again surrendering to American pressure," the former Congress chief alleged. In his earlier post, Congress general secretary Ramesh said, "Just as we warned on August 6, 2026, to which the Hon'ble FM herself had deemed it fit to respond, the Modi Government is now using new laws bulldozed through Parliament to start the process of charging for UPI." "A notification has just been issued under the amended Payment and Settlement Systems Act, 2007 that prohibits banks and providers from charging only for UPI transactions under Rs 2000. But there is NO explicit protection for any transaction above this cap," Ramesh said on X. The stage is clearly being set for all of us to pay a fee for UPI transactions, he claimed. "Tomorrow the cap itself might be changed with another such notification - there is no longer a guarantee in the law. For all we know, the government can introduce a charge for daily person-to-person transactions as well," Ramesh said. "The Modi government has yet again shown complete lack of honesty and transparency and has broken the trust of users. Is all of this being done to open digital payments for American companies to appease President Trump?" the Congress general secretary said. Last month, the Congress had attacked the government over the Taxation and Other Laws (Amendment) Bill before it was passed, asking whether Modi is seeking to dilute UPI and open the digital payments sector to American businesses "under pressure" from his "good friend Donald Trump". Ramesh had said the Modi government's latest bill removes the statutory guarantee that keeps UPI transactions free. It opens the door to Merchant Discount Rate (MDR) charges, which can easily be expanded to all payments in the future, Ramesh had said. Replying to Ramesh, Sitharaman had said, "Before spreading a canard, @Jairam_Ramesh ji, please consider this: Merchant Discount Rate (MDR) applies only to merchants and not to the end users/customers. It will support the Banks & Fintech to invest more in infrastructure, innovation & security. All users of UPI will reap the benefits of this investment." With inputs from PTI
