‘UPI Tax Must Go’: Rahul Gandhi Accuses Modi Government of Giving in to US Pressure

Rahul Gandhi Demands Rollback of ‘UPI Tax’, Accuses Modi Government of Bowing to US Pressure

Congress leader and Leader of Opposition in the Lok Sabha Rahul Gandhi on Wednesday demanded the immediate withdrawal of the newly introduced Merchant Discount Rate (MDR) framework for certain UPI merchant transactions. He referred to the measure as a “UPI tax” and alleged that the policy would ultimately place an additional financial burden on ordinary Indians.

Gandhi also invoked former Prime Minister Indira Gandhi while criticising Prime Minister Narendra Modi and alleged that the government was taking decisions that benefited the United States and American companies. These are political allegations made by Gandhi; the government has rejected the characterisation of MDR as a tax and denied that consumers will be charged directly. 

What has changed in UPI payments?

Under the new framework, a 0.4% MDR will apply from October 15, 2026, to specified merchant UPI transactions above ₹2,000, with certain sector-specific provisions and exemptions. The government says the charge applies within the merchant-payment ecosystem and not directly to consumers. 

According to the Finance Ministry, person-to-person UPI payments will remain free, while merchant payments up to ₹2,000 will also remain free. The government estimates that around 96% of P2M UPI transactions will remain unaffected. 

Gandhi, however, has argued that charges imposed on merchants could eventually be passed on to consumers through higher prices. He has also alleged that the move reflects pressure from American payment companies—an allegation the government has rejected.