- Supreme Court declined to stay 0.4% UPI charge.
- Court sought responses from Centre, RBI, NPCI.
- Petitioner questions legal basis of 0.4% UPI fee.
The Supreme Court on Monday, September 28, declined to stay the implementation of a proposed 0.4% Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions exceeding Rs 2,000, while issuing notices to the Centre, the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI).
The court has directed the three authorities to submit their responses within four weeks on a petition challenging the proposed charges, reported Moneycontrol.
The petition, filed by Anjan Dutta, questions the legal basis of the charges and alleges that the move violates the fundamental rights to equality before the law and to trade.
What Is The UPI Charges Dispute?
The challenge concerns a notification dated September 16 that proposes an MDR of 0.4% on UPI payments above Rs 2,000.
The petitioner has argued that the system is being introduced without adequate consultation and that the required legal procedures have not been followed.
According to the petitioner, imposing additional charges could increase the burden on small businesses and encourage some merchants to seek cash payments instead of digital transactions. The petition also raises concerns about the impact on efforts to promote a digital economy.
The Supreme Court has, however, not ordered a stay on the implementation of the system at this stage.
Also Read : Tata Sons Mandatory Listing: RBI Seeks Compliance Timeline After September 2025 Deadline
What Did The Government Tell The Supreme Court?
During the hearing, Additional Solicitor General Venkataraman argued that UPI transactions, like debit and credit card payments, involve operational costs.
He told the court that the proposed charge was not a statutory levy imposed by the government but a settlement fee between participating entities, facilitated by NPCI.
The law officer also said the government would not receive any part of the amount collected through the arrangement.
Venkataraman further submitted that the system had not yet been implemented and that October 15 would mark its first milestone. He told the court that 96% of users of the payment gateway would be exempt from the charges.
Supreme Court Questions Legal Basis Of Recovery
During the proceedings, Justice Joymalya Bagchi questioned the executive authority under which the proposed recovery would be made.
The judge asked what the nature of the charge was if it was not a fee, and sought clarity on the authority to impose it.
The petitioner’s lawyer, meanwhile, submitted that transactions involving black money had declined following the introduction of UPI.
The hearing comes amid a legal challenge to the proposed MDR framework and its potential implications for merchants using digital payment systems.
The Centre, RBI and NPCI are now required to respond to the petition within four weeks. The Supreme Court’s decision to issue notices does not amount to a final ruling on the legality of the proposed charges.
Also Read : Uttar Pradesh Introduces New Rule For Loose Sweets: Check What’s Changing From October 15
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: abplive.com
