From 15 Oct 2026 · not a tax
UPI MDR calculator for merchant payments
Headlines called it a UPI tax. It is a 0.4% merchant fee on some P2M payments above ₹2,000. See whether your shop is in the 96% that stay free, and what the rest actually costs after GST.
This is not a government tax. From 15 October 2026, banks may levy a Merchant Discount Rate on some person-to-merchant UPI payments above ₹2,000. P2P stays free. Customers cannot be charged.
Merchant type
Estimated monthly MDR
₹480.00
24 bills above ₹2,000 · yearly ₹5,760.00
Worked numbers (standard P2M)
- ₹1,500 kirana scan — ₹0
- ₹3,000 — ₹12 MDR (press example)
- ₹50,000 — ₹200
- ₹75,000 and above — ₹300 cap (so ₹1,00,000 is still ₹300, not ₹400)
- Petrol / rail / telecom / insurance / agri above ₹2,000 — flat ₹5
Source: Finance Ministry / PIB 15 Sep 2026. Banks must not pass MDR to the customer. App providers cannot add a platform fee on UPI.
Read the full explainer →FAQ
UPI MDR questions
Is the new UPI charge a tax?
No. The Finance Ministry said MDR is neither a tax nor a charge collected by the government or NPCI. From 15 October 2026 it is a merchant discount rate paid to banks and app providers on some person-to-merchant UPI payments above ₹2,000. 18% GST may apply on that MDR; registered merchants can usually claim ITC.
Who still pays nothing?
Person-to-person transfers stay free at any amount. Merchant payments of ₹2,000 or less stay free. Small merchants collecting up to ₹1 lakh a month on UPI QR (P2PM) stay on zero MDR. The government says about 96% of P2M transactions remain unaffected.
Can I add 0.4% on the customer's bill?
No. Banks have been told not to let merchants pass MDR to customers, and UPI apps cannot add a platform fee. Price your goods as you like; do not show a UPI surcharge on the bill.
How is this different from a payment gateway?
A typical gateway still takes about 2% + 18% GST (2.36%) on cards. UPI MDR is 0.4% and only on P2M above ₹2,000, capped at ₹300. Direct UPI remains far cheaper. Compare both in this calculator.
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