‘Ruler Should Collect Taxes From Citizens…’: NITI Aayog VC After UPI MDR Move

Last Updated:September 16, 2026, 8:51 PM IST

Lahiri said the government can’t subsidise every transaction indefinitely and that users of a service should contribute towards its cost.

Lahiri also compared the proposed UPI charge with fees levied for other banking services, arguing that the cost would be relatively small for high-value transactions. (Photo: ANI)

NITI Aayog Vice Chairman Ashok Kumar Lahiri on Wednesday defended the Merchant Discount Rate (MDR) proposed on high-value UPI transactions, arguing that businesses need to operate on a self-sustainable basis.

Lahiri said the government cannot subsidise every transaction indefinitely and that users of a service should contribute towards its cost rather than expecting the government to bear the expense.

Quoting ancient Indian teacher and philosopher Chanakya, Lahiri said, “A ruler should collect taxes from citizens as a bee collects honey from a flower — gently, gradually, and without inflicting pain or bruising the petals.”

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Clarifying that his comments did not represent the official position of NITI Aayog, Lahiri said, “As far as UPI is concerned, this is not NITI Aayog’s official position; this is my personal position. My view is that for any business or any transaction, the user should pay.”

Lahiri also compared the proposed UPI charge with fees levied for other banking services, arguing that the cost would be relatively small for high-value transactions.

“Look at the numbers. That is for Rs 100. You pay 40 paise for a transaction worth Rs 100. That too on big transactions… Is that going to kill you? No, but you need to run businesses on a self-sustainable basis. You will get used to it,” Lahiri said.

He cited cheque books as an example of a banking service for which customers may have to pay a small fee.

“For example, cheque books — when you take them from banks, you pay a small amount for it. Does it pinch? It’s part of the business,” Lahiri said.

Ending nearly six years of fully free UPI payments, the government had on Tuesday introduced a 0.4 per cent fee on transfers worth more than Rs 2,000 made to merchants through the platform from October 15, while ring-fencing person-to-person transactions as well as small payments from any charge.

The finance ministry clarified on Wednesday that there was no foreign influence behind the decision to impose a 0.4 per cent MDR (Merchant Discount Rate) on UPI transactions above Rs 2,000.

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What are the new UPI transaction fee rules introduced by the government?

The government introduced a 0.4 percent Merchant Discount Rate (MDR) on UPI transfers worth more than Rs 2,000 made to merchants, effective from October 15, 2026. This decision ends nearly six years of fully free UPI payments. However, the policy explicitly ring-fences and protects everyday person-to-person (P2P) transactions as well as small payments from any charges.

How did NITI Aayog Vice Chairman Ashok Kumar Lahiri defend the new UPI MDR charges?

Ashok Kumar Lahiri defended the charges by stating that businesses must operate on a self-sustainable basis rather than relying on indefinite government subsidies. He argued that the cost is relatively small for high-value transactions, equating to 40 paise for a Rs 100 transaction, and compared it to paying a small fee for bank cheque books. He also quoted the philosopher Chanakya, saying a ruler should collect taxes gently, like a bee collecting honey from a flower.

Is the new UPI merchant discount rate based on any foreign influence?

No, the finance ministry clarified that there was no foreign influence behind the decision to impose the 0.4 percent Merchant Discount Rate (MDR) on UPI transactions above Rs 2,000.

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Saurabh VermaDeputy News Editor

Saurabh Verma is a Deputy News Editor at News18.com, specialising in Indian politics and breaking global news. With years of experience tracking election strategies, he decodes domestic issues for mil…Read More

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