The Ministry of Finance clarified on Thursday that the Merchant Discount Rate (MDR) to be imposed on UPI transactions over Rs 2,000 is not any form of tax, cess or surcharge.
To ensure that consumers do not bear the burden, the Ministry will hold meetings with traders’ associations, the Indian Banks’ Association (IBA) and merchant bankers.
As per sources in the Ministry of Finance, the government will likely hold a meeting with the Confederation of All India Traders (CAIT) in the coming days to get a better understanding of the on-ground challenges, if any.
“MDR is NOT a tax, a cess nor surcharge. Not a single rupee of MDR goes to the Government of India nor to the Consolidated Fund of India. We are willing to talk to IBA, merchant banks and have asked the banks and IBA to ensure that the charges are not passed on to the end-consumers,” said sources in the Ministry of Finance aware of the matter.
It has further been clarified that if there are any complaints of MDR being passed on to consumers, the government and other associated bodies will ‘pick up’ the matter accordingly.
While the banks have not received any formal advisory yet regarding the actions to be taken, the Ministry affirmed that the decisions will be made in favour of consumers.
Reiterating the modus operandi of GST 2.0 implementation, when the Central Board of Indirect Taxes and Customs (CBIC) kept an eye for the next few quarters to ensure that the rate cuts were passed on to consumers, the Ministry assured that a similar approach will be followed for MDR on UPI to ensure that consumers remain safeguarded.
There will be a dedicated outreach programme and campaign by the IBA, including advertisements designed in local languages, to ensure the purpose of the MDR is well communicated to the masses and there is no fake cause of fear.
Regarding GST on MDR, Ministry sources clarified that the GST Council is yet to take up the matter. However, it has been assured that the Council will be ‘reasonable and fair towards the common man’, as UPI transactions involve the masses.
Regarding petrol pumps in some areas refusing to accept UPI payments, the Finance Ministry clarified that the issue has been taken up by the Ministry of Petroleum. Soon, there will be a meeting among dealers, Oil Marketing Companies (OMCs) and the Petroleum Ministry.
