INDIA: Extra Charge on UPI Payments?
UPI payment has conveniently taken over as the most efficient way of transactions however will it continue to remain free?
We are living in 2022. UPI payments have become a day-to-day part of our lives. Right from paying money to a friend to scanning a QR Code and paying a bill at a shop UPI payment has conveniently taken over as the fastest and most efficient way to send or receive money. Earlier, there were a few rumors that the government might be planning to charge some tax on UPI payments. However, now the government has issued a clarification regarding the same.This news of the government’s plans to charge tax on UPI payments has surfaced after the Reserve Bank of India (RBI) released a discussion paper in which the governing bank proposed introducing charges for UPI Transactions which are currently completely non-chargeable and free.
The discussion paper released by RBI on 17th August was based on applying charges in payment systems, including the UPI, NEFT, and IMPS. As part of the proposal discussion, the Reserve Bank’s Paper had also recommended using a charge as low as one or two paise per transaction. The paper also elaborated on the need to make UPI Payments chargeable to provide additional revenue. The paper also mentioned that the UPI transactions are essentially the same as IMPS (Instant Payment Service) offered by the banks and hence they should also carry the same fee as well. Apart from UPI transactions, the central bank’s paper also intends to impose a fee on debit card transactions.
However, if you are worried that UPI payments can now be made chargeable, The simple answer to this question is ‘No, the UPI payments won’t be made chargeable’. As of now, the Central Government has not issued any notification which would imply that it is planning to make UPI Payments Chargeable for the citizens. In fact, on Sunday, 21st August 2022, sharing a tweet from its official account, the Finance Ministry mentioned that the Government is not going to apply any charges on the digital mode of payment UPI. It further stated that UPI is a public good and provides citizens with a safe, transparent, and convenient way of carrying out digital transactions.
The Finance Ministry noted that the concerns shared by the central bank about the cost recovery for service providers will have to be managed through other means. The ministry also added that it has provided and will continue to provide financial support for the digital payment ecosystem.The government fully supports digital payment and they will further promote the mode so that people can adopt it. What do you think about this? Do mention your thoughts in the comments section below.
