A fresh political controversy has erupted concerning recommendations related to the Merchant Discount Rate (MDR) on UPI transactions. Bhartruhari Mahtab, Chairman of the Parliamentary Standing Committee on Finance and a BJP MP, is defending the panel's report, asserting its unanimous adoption. Conversely, Congress MP Manish Tewari has rejected claims that Opposition members supported the specific proposal to introduce MDR on digital payments.
Mahtab Defends Unanimous Report Adoption
According to Mahtab, the committee's report on the Demands for Grants was adopted unanimously following due procedure. He emphasized that the process involved discussions, preparation of a draft report based on written answers from departments, circulation, and subsequent adoption by the committee. "I believe it was a unanimous report that was submitted to Parliament. Everything is on record," Mahtab stated, countering Tewari's objections.
Tewari Rejects Support for Specific MDR Proposal
Manish Tewari strongly refuted suggestions that Opposition members backed the proposal for MDR. He clarified that while examining the Demands for Grants for the Department of Financial Services for FY 2026-27, the committee's recommendation was limited to exploring a possible self-reliant, tiered revenue model for digital payments. Tewari highlighted the word "explore" in the committee's recommendation, stating:
"The Committee recommend that while the proposed 3-year multi-year scheme and cash back components are necessary to democratise digital payments in untapped Tier 3-6 cities, the Department of Financial Services must concurrently explore a self-reliant, tiered revenue model."
He further cited the government's Action Taken Report, which noted the Department of Financial Services was "currently exploring two options: (i) Examining the feasibility of restoring MDR for certain high threshold transactions/ merchants; and (ii) a tiered incentive structure to phase out the Government support in the next few years." Tewari maintained that the actual proposal to levy a transaction fee or MDR on UPI and other digital payments never returned to the committee for further discussion after this exploratory stage.
New UPI MDR Framework
This exchange has intensified scrutiny on how the committee's earlier recommendations relate to the National Payments Corporation of India (NPCI)'s new Merchant Discount Rate framework. Introduced on September 15, the revised framework mandates an MDR of 0.4 per cent on select Person-to-Merchant UPI transactions exceeding ₹2,000, capped at ₹300 per transaction. This new structure is set to take effect from October 15, though consumers will continue to use UPI free of charge for their transactions.