SC asks ‘what is the service’ behind new chargesNEW DELHI: The Supreme Court has issued notice to the Centre, the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) on a plea challenging Gazette notifications introducing charges on commercial UPI transactions above Rs 2,000. A bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana was hearing a writ petition filed by advocate Anjan Datta challenging Gazette notifications issued by the Union Ministry of Finance on September 14 and 15.

The court directed the Centre and other respondents to file their counter affidavits within four weeks, while observing that the issue was “less legal and more technical”." Is it tax or a fee?

If not a fee, what is the executive basis for making this expropriation? What is the service?"

if it permits transfer, so cash from one assessee moves to another, then what is the character of receipt. In UPI who gets it?

We are not on the [coverage]. We are on legal incidence.

What is the source of legal incidence of this?" Bagchi said.

The court, however, declined to stay the Centre’s decision to impose merchant discount rate (MDR) on specified person-to-merchant UPI transactions above Rs 2,000. The charges are set to take effect from October 15.

The Centre told the Supreme Court that 96 per cent of people using payment gateways would be exempt from the MDR on UPI payments above Rs 2,000. The plea has been filed against the Union government, the RBI, NPCI and the UPI & Services Steering Committee.

The petitioner has contended that imposing charges on commercial UPI transactions could have a wider impact on the public, as businesses may pass the additional costs on to consumers. The Union government has introduced a framework allowing MDR charges on specified high-value commercial UPI transactions while retaining free UPI payments for individuals and small merchants.

The move follows amendments to the Payment and Settlement Systems Act, 2007, and notifications issued by the Ministry of Finance in September 2026. 4 per cent Merchant Discount Rate (MDR) applicable to eligible merchant UPI transactions,” AIMRA Vice President and President for Delhi NCR region, Tarvinder Singh, said in a statement.

Singh said retailers would symbolically cover their UPI QR codes with black cloth and refrain from accepting UPI payments on Gandhi Jayanti. In a representation to finance minister Nirmala Sitharaman, AIMRA said the MDR would result in an immediate net monthly loss of Rs 2,000 to Rs 12,000 for a small retailer processing Rs 5 lakh to Rs 30 lakh a month through UPI, substantially reducing their net income.