1 hr ago
CPI(ML) Leader Calls New UPI MDR Framework 'Tax'
A new rule will allow some UPI payments made to businesses to have a small merchant fee.
The fee applies mainly to certain merchant payments above Rs 2,000.
Payments between people and most everyday merchant payments will stay free.
The government says this is not a tax and will help keep the UPI system working over time.
CPI(ML) Liberation leader Dipankar Bhattacharya disagrees and calls the fee a “UPI tax.”
He says small shops and businesses may pass the cost on to customers through higher prices.
He compared the change with demonetisation, which he described as another major economic shock.
He also questioned whether the announcement was connected to the United States or a possible trade agreement.
The new MDR is scheduled to begin on October 15.
CPI(ML) Liberation general secretary Dipankar Bhattacharya called the new UPI Merchant Discount Rate a “UPI tax” and demanded its withdrawal.
Bhattacharya said the framework could burden small shopkeepers, MSMEs and consumers, potentially leading to higher prices.
The government said MDR is not a tax and is intended to support the long-term sustainability of the UPI ecosystem.
Person-to-person UPI payments and merchant transactions up to Rs 2,000 will remain free, while a 0.4% rate applies to specified larger merchant payments.
The MDR will take effect on October 15, with charges paid by merchants and capped at Rs 300 for transactions of Rs 75,000 or more.
- Who
- CPI(ML) Liberation general secretary Dipankar Bhattacharya and the Indian government are the main parties involved.
- What
- A new Merchant Discount Rate framework will charge merchants on specified UPI payments, while Bhattacharya has opposed it and called it a “UPI tax.”
- Where
- The framework concerns India’s UPI payment system; Bhattacharya referred to the recent BRICS summit in Delhi when discussing its timing.
- When
- The framework is scheduled to apply from October 15; it was announced during the week described in the articles.
- Why
- The government says the framework is intended to support the long-term sustainability of UPI, while Bhattacharya says it could burden businesses and consumers.
CPI(ML) Liberation’s Opposition
Government’s Defense
Whether the MDR is a tax
CPI(ML) Liberation’s Opposition
Dipankar Bhattacharya calls the framework a “UPI tax” and says it has been presented as a discount rate paid by merchants.
Government’s Defense
The government says MDR is neither a tax nor a charge collected by the government or the National Payments Corporation of India.
Impact on small businesses and consumers
CPI(ML) Liberation’s Opposition
Bhattacharya says small shopkeepers, MSMEs and ordinary people will bear the burden, with merchants likely to pass the cost to customers through higher prices.
Government’s Defense
The government says most transactions will remain free or unaffected, limiting the framework’s impact on everyday users.
Reason for introducing the framework
CPI(ML) Liberation’s Opposition
Bhattacharya questions whether the timing is linked to appeasing the Trump Administration or a prospective India-US trade agreement.
Government’s Defense
The government says the framework is designed to ensure the long-term sustainability of the UPI ecosystem.
Key facts
- MDR rate
- 0.4% for specified person-to-merchant UPI transactions above Rs 2,000.
- Effective date
- October 15.
- Free transactions
- Person-to-person payments and merchant payments up to Rs 2,000 remain free.
- Transaction coverage
- The government says about 96% of merchant transactions will remain unaffected.
- Maximum charge
- MDR is capped at Rs 300 for transactions of Rs 75,000 or more.
- Who pays
- Merchants, rather than consumers, are responsible for the MDR.
- Government rationale
- The fee will be distributed among banks, payment service providers and other payment-system participants to support UPI sustainability.
Quotes
Dipankar Bhattacharya
CPI(ML) Liberation general secretary criticizing the 2016 demonetisation announcement
“Can the small shopkeepers, MSME sector and ordinary people who will have to bear the brunt of the UPI shock in their everyday existence force the Modi government to roll the UPI tax back and make the BJP pay its political price in the coming elections?”
rediff.com
“No merchant is going to bear the burden without transferring it to the purchaser. In fact, the UPI fee will become yet another alibi, or 'incentive', for raising prices.”
rediff.com
Sources
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