New Delhi: The Congress on Thursday attacked the government over the Taxation and Other Laws (Amendment) Bill, asking whether Prime Minister Narendra Modi is seeking to dilute UPI and open the digital payments sector to American businesses “under pressure” from his “good friend Donald Trump”.
Congress general secretary Jairam Ramesh said the Modi government’s latest bill removes the statutory guarantee that keeps UPI transactions free.
It opens the door to Merchant Discount Rate (MDR) charges, which can easily be expanded to all payments in the future, Ramesh said on X.
The cost will inevitably be borne by ordinary people who will now have to pay to use UPI transactions, he said.
“The Modi Government’s claim that this is the only route to keep UPI financially sustainable is a lie. The RBI has the financial capacity to sustainably fund the UPI ecosystem without imposing charges on merchants or consumers,” Ramesh said.
In 2025-26, the RBI transferred Rs 2.86 lakh crore to the Modi government, he said.
It would take only a small fraction of this surplus transfer to support this critical digital public infrastructure, Ramesh said.
“Indeed, the real reason why this amendment is being introduced is perhaps more concerning. It follows the U.S. Trade Representative’s 2026 report which criticizes UPI and RuPay for being free and accuses them of having driven out American payment platforms like Visa and MasterCard,” Rameh said.
“Is the Prime Minister seeking to dilute UPI and open the digital payments sector to American businesses under pressure from his good friend (US President) Donald Trump,” the Congress general secretary asked.
It wouldn’t be the first time, he added.
Trump has openly claimed at least 100 plus times that he pressured the Modi government into calling an abrupt ceasefire to Operation Sindoor using the threat of American tariffs, Ramesh said.
The US has also claimed that India’s gradual tapering down of oil imports from Russia has been prompted by Trump’s diktats, he said.
“We also know that the Modi Government capitulated to President Trump’s bullying and accepted a grossly unfair Indo-US trade deal which sacrifices the interests of our farmers and small businesses in particular,” he said.
Ramesh also shared a screenshot of the portion of the bill.
“In the Payment and Settlement Systems Act, 2007, in section 10A, for the words, figures and letters ‘the electronic modes of payment prescribed under section 269 SU of the Income-tax Act, 1961’, the words ‘one or more electronic modes of payment as the Central Government may, by notification, specify’ shall be substituted with effect from the date of publication of this Act in the Official Gazette,” the bill says.
His remarks came after the Lok Sabha passed the Taxation and other Laws (Amendment) Bill without a debate due to persistent sloganeering by the Opposition over various issues, including alleged theft of donation at the Ram temple in Ayodhya.
After the passage of the bill, through which the government also amended the Payment and Settlement Systems Act, 2007, the House was adjourned for the day.
Through the bill the government seeks to attract more foreign capital, promote domestic electronics manufacturing and make it easier for foreign cloud companies to use Indian data centres by providing “process certainty”.
The Bill also proposes to remove the linkage between the Payment and Settlement Systems Act and the Income Tax Act, and give a legal backing to the government to modify the zero-MDR framework on UPI and RuPay card transactions.
At present, banks and payment-system providers cannot directly or indirectly charge users for payment made through UPI and RuPay debit cards.
The Bill proposes allowing the Central government to decide, through notification, which electronic payment modes or transactions must remain free.
The Taxation and other Laws (Amendment) Bill, 2026, replaces the June 5 ordinance that provided I-T exemption to income from interest income and capital gains made by FPIs from investments in G-Secs.
The bill proposes to make it easier for fund managers to relocate to India but cutting down on the list of conditions that these funds will have to satisfy to ensure that their global income does not get taxed in India.
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