Lagatar24 Desk
New Delhi: Congress on Thursday pushed back against the government’s claim that five of its members had supported the introduction of a 0.4 percent merchant discount rate (MDR) on UPI payments above Rs 2,000, asserting that no such discussion took place during the Parliamentary Standing Committee’s proceedings.
Gogoi Says No Specific UPI Tax Proposal Was Presented to Committee
Congress MP Gaurav Gogoi said the Parliamentary Standing Committee on Finance had never discussed the UPI tax proposal recently announced by the government, noting that the department of finance had presented no specific proposal on the matter when it met committee members. He said questions were raised about the necessity of MDR, but government representatives were unable to provide satisfactory answers at the time, reiterating the party’s demand to roll back the levy, arguing it would hurt small Indian merchants, vendors and entrepreneurs while benefiting major American corporations.
Manish Tewari Accuses Centre of Misusing Committee Proceedings
Fellow Congress MP Manish Tewari backed Gogoi’s claim, accusing the government of attempting to use the privileged proceedings of the Parliamentary Standing Committee to score political points. Tewari confirmed that no specific proposal regarding the MDR to be levied on UPI transactions from October 15, 2026, including its rate, quantum, exemption slabs or ceilings, was ever formally brought before the committee, adding that opposition members had repeatedly raised concerns over the necessity and efficacy of MDR across various committee sittings. He called the claim that certain members supported the measure an inaccurate characterisation of confidential committee proceedings.
Government Functionary Had Earlier Claimed Congress MPs Backed the Move
The clarification comes a day after a government functionary claimed that Congress MPs, including former finance minister P. Chidambaram and former UPA minister Manish Tewari, had supported the government’s decision during the parliamentary panel’s proceedings, questioning why Rahul Gandhi was opposing a measure his own party members had reportedly endorsed.
Standing Committee Flags Funding Gap in UPI Incentive Scheme
According to the standing committee’s report, chaired by BJP MP Bhartruhari Mahtab, the panel reiterated its earlier recommendation for enabling legislative provisions to support a tiered MDR structure, citing the need for a viable revenue model. However, the committee expressed deep concern over the significant mismatch between the Rs 2,000 crore budgetary allocation and the industry’s estimated operational cost of Rs 20,700 crore, warning that any delay in operationalising a calibrated MDR framework for high-value transactions could leave payment service providers heavily reliant on inadequate subsidies, threatening critical investments in cybersecurity, fraud prevention and network infrastructure.
Committee Notes Shortfall in Government Incentive Coverage
On the incentive scheme promoting RuPay debit cards and low-value UPI transactions, the committee noted the Rs 2,000 crore allocation for 2026-27 aimed at offsetting ecosystem costs under the zero-MDR policy, but observed that current government incentives cover only 11 percent of the industry’s actual costs and 14 percent of potential MDR collections, creating a structural funding gap that could affect long-term infrastructure investment. The committee recommended that while the proposed multi-year scheme and cashback components remain necessary for expanding digital payments in underserved Tier 3-6 cities, the Department of Financial Services must simultaneously explore a self-reliant, tiered revenue model.
