'Have a spine': Rahul targets PM Modi, says stop 'lying down' before US, 'roll back UPI tax'

Leader of Opposition in the Lok Sabha Rahul Gandhi on Wednesday stepped up his attack on Prime Minister Narendra Modi over the Centre’s decision to introduce a Merchant Discount Rate (MDR) on certain UPI payments, demanding an immediate rollback and accusing the government of yielding to pressure from the United States.

In a video message, Gandhi asked the Prime Minister to “have a spine” and stop “lying down” before the US, continuing the Congress’s criticism of the new framework that will impose a 0.4 per cent MDR on specified merchant UPI transactions above Rs 2,000.

Rahul targets Modi

Gandhi alleged that the decision would ultimately impose an additional financial burden on Indians and claimed that it would benefit American payment companies. “Modi ji, roll back the UPI tax. Now,” Gandhi said, describing the MDR as a tax despite the government maintaining that the charge is neither a tax nor money collected by the Centre.

Invoking former prime minister Indira Gandhi, the Congress leader said leaders should be prepared to stand up to powerful countries when India’s interests were at stake. He alleged that Modi had instead chosen to yield to US pressure. The Congress has repeatedly claimed that American payment companies have opposed India’s zero-MDR regime and alleged that the latest change has been made under external pressure. The government has rejected the Opposition’s charge.

New fee from October

Under the new framework, a 0.4 per cent MDR will apply to specified person-to-merchant UPI transactions above Rs 2,000 from October 15.

Person-to-person transactions will remain free irrespective of the amount transferred. Merchant payments of up to Rs 2,000 will also continue without an MDR, while small merchants covered by the zero-MDR framework will remain exempt. The Finance Ministry has said around 96 per cent of person-to-merchant transactions will remain unaffected by the change. The MDR is paid by merchants to payment ecosystem participants for processing digital transactions. The government has clarified that the charge will be distributed among banks and payment application providers to support the operation and expansion of the UPI ecosystem.

Government rejects ‘tax’ claim

The Centre has rejected the Opposition’s characterisation of the MDR as a “UPI tax”, stressing that it is not collected by either the government or the National Payments Corporation of India. According to the Finance Ministry, the revised framework is intended to ensure the long-term financial sustainability of UPI while shielding individuals and small merchants from additional charges. Government sources have also indicated that there is no proposal to reconsider the 0.4 per cent MDR framework despite demands for its withdrawal.

Opposition steps up attack

The issue has triggered a wider political confrontation, with Congress president Mallikarjun Kharge and other Opposition leaders also criticising the move and warning that merchants could eventually pass the additional cost on to consumers. The government, however, has maintained that the overwhelming majority of UPI transactions will continue to remain free and that the revised framework is aimed at supporting the infrastructure behind India’s rapidly expanding digital payments ecosystem.