On Monday, the Supreme Court requested the Centre’s response to a petition contesting the government’s move to impose a Merchant Discount Rate (MDR) on UPI person-to-merchant transactions exceeding ₹2,000.
While hearing a public interest litigation (PIL) filed by advocate Anjan Datta, a bench led by Chief Justice of India (CJI) Surya Kant remarked, “This matter is less legal and more technical in nature. We require the Centre to present the facts in a brief affidavit.”
The petition, submitted and argued by Datta together with advocate Ashutosh Dubey, contested the September 14 notification issued by the Ministry of Finance, which is set to come into force on October 15.
Under this proposed framework, the Centre has suggested imposing a 0.4 per cent MDR on UPI payments exceeding ₹2,000 made to merchants, with the fee capped at ₹300 for transactions above ₹75,000.
The Centre had explained that this decision would not affect person-to-person UPI transfers, which will continue to be free of charge irrespective of the transaction amount.
The bench, which also included Justices Joymalya Bagchi and V Mohana, stated that it only wished to examine the legal basis for imposing this charge.
It asked, “What is the executive authority for levying this charge? If it is a fee, it cannot be introduced through an executive order. If it is not a fee, then what is its nature?”
The Additional Solicitor General (ASG) responded, “Not a single rupee from this amount will go to the government. It is a settlement fee between the two parties – the bank and the service provider – and is merely facilitated by the National Payments Corporation of India (NPCI).”
The court stated that once the response is received, it will be in a better position to determine in whose hands it constitutes 'income'.
