Key dates ahead
- Supreme Court hears the PIL against the MDR (bench led by CJI Surya Kant). The plea asks the court to quash or pause the framework.
- “No UPI Day” protest called by some trade bodies (MACCIA, AIMRA and others). CAIT says it has not called it.
- GST Council meeting may consider relief on the 18% GST charged on the MDR fee. Date not officially notified.
- MDR takes effect: 0.4% on merchant UPI payments above ₹2,000, capped at ₹300.
- Framework for the small-merchant digital payments fund, due within three months of the 15 Sep announcement.
What it means for you
Customers
No charge. Paying shops by UPI, sending money to people (P2P) and AutoPay stay free. A shop cannot pass the MDR on to you.
Small shops
If you receive up to ₹1 lakh a month through UPI QR, you pay no MDR, even on payments above ₹2,000. Charges start only after 3 months in a row above ₹1 lakh.
Larger merchants
From 15 October, 0.4% of the full amount (max ₹300) on each payment above ₹2,000, plus 18% GST on the fee. On ₹5,000 that's ₹23.60 in total.
The rules at a glance
| Payments up to ₹2,000 | Free |
| Above ₹2,000 | 0.4%, max ₹300 |
| Small merchants (up to ₹1 lakh/month) | Free |
| Railways, telecom, insurance, fuel, utility bills | Flat ₹5 |
| Education | Flat fee or capped rate (amount not stated) |
| Mutual funds, stockbrokers | 0.02%, max ₹300 |
| P2P transfers, AutoPay | Free |
Source: official FAQ from the Department of Financial Services (15 Sep 2026).
Full timeline
- Court
The PIL is listed for hearing on Monday 28 September before CJI Surya Kant, Justice Joymalya Bagchi and Justice V Mohana. Mobile retailers (AIMRA) confirm they will join the 2 October protest.
Source: Business Standard
- Protest
CAIT, the largest traders' body, denies calling a nationwide “No UPI Day” and calls such reports misleading.
Source: Business Today
- Statement
Finance Minister Nirmala Sitharaman: MDR is “not a tax… not a cess… not even a surcharge”. The merchant pays it and it cannot be passed on to customers. The fee is shared: 40% card/account bank, 30% acquirer, 20% UPI app, 10% payer's PSP.
Source: Business Today
- GST
NPCI chief Dilip Asbe says 75% of merchants have never received a UPI payment above ₹2,000. Government sources say the GST Council may take a view on the 18% GST on MDR, possibly at its next meeting.
Source: Business Standard · ThePrint (PTI)
- Protest
Several trade bodies announce a “No UPI Day” on 2 October, asking shops to cover QR codes and soundboxes.
Source: Business Standard
- Statement
NPCI: payments up to ₹2,000 (over 96% of merchant UPI volume) carry no MDR and so no GST. GST applies only to the fee, and registered merchants can claim input tax credit.
Source: Business Today
- Court
Advocate Anjan Datta files a PIL in the Supreme Court challenging the notification and the amended Section 10A, citing no public consultation and harm to low-margin merchants.
Source: LiveLaw
- Official
Finance Ministry and NPCI announce the framework: 0.4% above ₹2,000, ₹300 cap, flat ₹5 for railways, telecom, insurance, fuel and utilities, 0.02% for capital markets, small merchants exempt. The official 42-question FAQ is published. RBI welcomes the move.
Source: Official FAQ (DFS)
- Official
Gazette notification under the amended Section 10A of the Payment and Settlement Systems Act lifts the zero-charge protection for merchant UPI payments above ₹2,000. Payments up to ₹2,000 and RuPay debit cards stay free.
Source: Business Today
- Official
PIB: “No charges for UPI users.” Any MDR would apply only to a limited set of merchant payments above a threshold, at a nominal rate.
Source: PIB
What could still change
- Supreme Court: the court could pause the rules, ask the government to respond, or dismiss the plea. This page will be updated as soon as there's an outcome.
- GST: the MDR fee currently carries 18% GST. The GST Council could cut or remove it, but nothing has been decided.
- Rates: the 0.4% rate and ₹300 cap are set by an NPCI-led committee, so they can be revised later.
Frequently asked questions
Has the Supreme Court stayed UPI MDR?
No. As of 27 September 2026 there is no stay. A PIL against the MDR is listed for hearing on Monday 28 September 2026. Until a court orders otherwise, the MDR starts on 15 October 2026.
When does UPI MDR start?
15 October 2026. From that date merchants pay 0.4% on UPI payments above ₹2,000, capped at ₹300 per payment. Payments up to ₹2,000 stay free.
Will customers be charged for UPI payments above ₹2,000?
No. The MDR is paid by the merchant, and the official FAQ says merchants cannot pass it on to customers. Paying by UPI stays free for customers at any amount.
Will the 18% GST on UPI MDR be removed?
Not yet. Government sources have said the GST Council may take a view on the 18% GST charged on the MDR fee, reportedly at a meeting around 7 October. No decision has been announced.
Is there a No UPI Day on 2 October?
Some trade bodies, including MACCIA and the All India Mobile Retailers Association, have called a “No UPI Day” on 2 October. CAIT, the largest traders' body, says it has not called one. Customers may find some shops not accepting UPI that day.
Is UPI MDR a tax?
No. The Finance Minister said on 25 September that it is not a tax, cess or surcharge. The fee goes to the banks, payment companies and UPI app involved in the payment, not to the government.
Do small shops have to pay UPI MDR?
No, if they receive up to ₹1 lakh a month through UPI QR. They stay at zero MDR even on single payments above ₹2,000, and GST registration is not needed for this exemption.