The government will start charging a 0.4% fee on UPI merchant transfers above Rs 2,000 from 15 October, ending six years of free payments.
Ashok Kumar Lahiri, NITI Aayog vice‑chairman, told reporters that the levy is a modest, self‑sustaining measure. He compared it to a bee collecting honey gently from a flower, quoting Chanakya to underscore the idea that taxes should be painless.
The fee has sparked backlash from shopkeepers who call it "Modi Tax." Ravi Kumar, a 35‑year‑old grocer in Bandra, said his monthly expenses have risen, and he fears the fee will erode his thin profit margins.
A Ministry of Finance spokesperson said the fee will strengthen UPI security and infrastructure, and that the decision was made in the larger interest of the digital payments ecosystem.
A review committee will convene in December to assess the fee’s impact on merchants, with the government promising adjustments if necessary.