NEW DELHI : Five Congress MPs, including former finance minister P Chidambaram, were present when the Parliamentary Standing Committee on Finance adopted a report recommending a tiered revenue framework for UPI, with no dissent recorded in the published minutes.
The development comes amid a political row over the Centre’s decision to introduce a 0.4% Merchant Discount Rate (MDR) on specified UPI payments to merchants above Rs 2,000. The new framework is set to take effect from October 15, while person-to-person transactions will remain free.
The five Congress MPs – P Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal and K Gopinath – were present on August 12 when the panel’s report was adopted, a senior government functionary said. No dissent from the Congress members was recorded in the minutes, he added.
‘Why Is Rahul Opposing Something His Own MPs Supported’:
The government has now cited the panel’s recommendations while responding to Congress leader and Leader of Opposition in Lok Sabha Rahul Gandhi’s criticism of the UPI charge.
“Why is Rahul Gandhi opposing something his own MPs, including former finance minister P Chidambaram and former minister in the UPA government Manish Tewari, supported within the parliamentary panel,” the functionary asked.
Gandhi has demanded that the decision be withdrawn, alleging that Prime Minister Narendra Modi has decided to “prostrate” before United States President Donald Trump and give a huge amount of money to America.
The government has rejected the allegation of foreign influence and maintained that the MDR is not a tax imposed on consumers.
What Did The Parliamentary Panel Recommend?:
The Standing Committee on Finance, chaired by BJP MP Bhartruhari Mahtab, called for a tiered MDR or revenue mechanism for UPI and said the framework should be notified and put into operation without delay.
The panel’s recommendation was linked to concerns over the financial sustainability of the UPI ecosystem. It noted that the government had allocated Rs 2,000 crore for 2026-27 to offset costs associated with the zero-MDR policy for RuPay debit cards and low-value BHIM-UPI transactions.
At the same time, the committee pointed to a significant gap between the government support and the estimated cost of operating the ecosystem, including investments in cybersecurity, fraud prevention and network infrastructure.
“The Committee note the massive Rs 2000 crore budgetary allocation for 2026-27 designed to offset ecosystem costs caused by the zero-MDR policy on RuPay and low-value UPI transactions,” the report stated.
“The Committee observe that while UPI is expected to process up to 150 billion transactions per month and add 600 million new users, the current government incentive covers merely 11 per cent of the industry’s actual costs and 14 per cent of potential MDR collections, creating a structural funding gap impacting long-term infrastructural investment,” it added.
The committee said the government should simultaneously work towards a self-reliant, tiered revenue model while continuing measures aimed at expanding digital payments in smaller cities and towns.
It also stressed that a sustainable revenue mechanism was necessary to reduce the UPI ecosystem’s dependence on government subsidies.
“The Committee would like to emphasise that establishing a viable revenue mechanism is critical to ensuring that the UPI ecosystem achieves financial sustainability without perpetually straining the government exchequer,” the report said.
The controversy comes as the Centre moves to implement MDR on specified merchant UPI transactions above Rs 2,000. Under the announced framework, the fee is charged to merchants rather than consumers, with the government saying customers will not be charged for using UPI.
Meanwhile, Congress MPs Gaurav Gogoi said the proposed UPI charge had not been discussed by the Parliamentary Standing Committee on Finance and claimed that the Department of Finance had not placed any specific proposal concerning a UPI tax before the panel when its representatives met committee members.
“The Parliament Standing Committee on Finance has not discussed the UPI tax proposal that the Modi government has recently announced. The Department of Finance did not have any specific proposal on UPI tax when they met the members of the Finance Committee,” Gogoi said. He further claimed that members of the committee had raised questions over the need for MDR, but that government representatives had not provided specific or “satisfactory answers” during the discussions.
“I reiterate that the recent UPI tax policies will hurt the small Indian merchants, vendors, entrepreneurs and help major American corporations,” he added. The five Congress MPs who were part of the Parliamentary Standing Committee on Finance included former Finance Minister P. Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal and K. Gopinath.
Backing Gogoi’s contention, Congress MP Manish Tewari said that the proceedings of Parliamentary Standing Committees were privileged and should not, according to him, be used for political point-scoring. “It is unfortunate that proceedings of Parliamentary Standing Committees that are supposed to be privileged are now sought to be used by the government to score brownie points,” Tewari said.
Tewari also supported Gogoi’s claim that the committee had not been presented with a specific proposal concerning the latest MDR on UPI transactions, including details of the proposed rate and exemptions. He further said that concerns had also been raised by committee members regarding the broader principle and rationale behind the introduction of MDR.
“Even on the principle or conceptual basis of MDR, as my colleague Gaurav Gogoi points out, concerns were raised by members with regard to its need, efficacy etc. over the course of various sittings of the Committee,” Tewari further mentioned. Tewari also objected to any claim that the proposed measure had received support from some members of the committee, saying such a description would not accurately reflect the confidential nature of parliamentary committee proceedings.
“To claim that a particular measure was supported by ‘certain members’ of the committee is an inaccurate and fallacious characterisation of the confidential proceedings of a Parliamentary Committee,” he added.
