NEW DELHI: Congress MPs Gaurav Gogoi and Manish Tewari have denied supporting the introduction of a merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions, despite claims by the parliamentary standing committee on finance that their participation in the deliberations indicated support. The committee chair, Bhartruhari Mahtab, stated that the MPs were present and participated in the discussion, with their approval taken before the report was submitted to Speaker Om Birla.

The committee report, tabled in the Lok Sabha on March 12, recommended the introduction of MDR to ensure the financial sustainability of the UPI system. It noted that while UPI processes up to 150 billion transactions monthly and adds 600 million new users, the current government incentive covers only 11% of industry costs and 14% of potential MDR collections, creating a structural funding gap.

Gogoi and Tewari, however, claimed the committee did not discuss the 'UPI tax' proposal, as the Department of Finance did not have a specific proposal when they last met the panel. Gogoi said questions were raised about the need for MDR, but government representatives lacked satisfactory answers. Tewari accused the government of misusing the privileged proceedings of the standing committee to make political points, stating no specific proposal on the MDR rate, quantum, or exemption slabs was ever brought before the committee.

Mahtab, a BJP MP, maintained that the MPs' participation was a matter of record and could be verified from the Lok Sabha secretariat. Government sources added that the final report is shared with all committee members before adoption, and an MP can submit a dissent if they disagree with recommendations. They stressed that the report was adopted unanimously.

The government's stance contrasts with the opposition's criticism, with Congress leader Rahul Gandhi accusing Prime Minister Narendra Modi of bowing to US President Donald Trump by imposing the MDR. Gandhi demanded a rollback of the decision, which has sparked debate over the impact on digital payments and small businesses.

The MDR, effective from October 15, imposes a 0.4% fee on UPI transactions exceeding ₹2,000 made to merchants. It does not apply to person-to-person transactions or automated recurring payments such as utility bills and subscriptions. The government has not provided details on how the collected fees will be used, leaving questions about the policy's long-term implications.

What remains unknown is the exact mechanism for allocating the MDR revenue and the extent of its impact on small businesses and digital transactions. The debate continues as both sides present conflicting accounts of the parliamentary proceedings and the government's intentions.