New UPI Charges From Oct 15: Full List of Who's Exempt

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The Complete Exemption List for UPI's New Charges

As the new UPI Merchant Discount Rate takes effect from October 15, 2026, the exemption list is arguably more important than the charge itself, since it covers the overwhelming majority of everyday UPI activity. Here's the full list.

1. All Person-to-Person (P2P) Transfers

Sending money to friends, family, or splitting expenses remains completely free, with no value cap and no conditions attached.

2. Any Merchant Payment of ₹2,000 or Below

Regardless of the merchant's size or category, a person-to-merchant payment at or under ₹2,000 attracts zero MDR.

3. Eligible Small and Micro Merchants

Vendors receiving UPI payments into a personal bank account remain exempt from MDR up to a defined monthly threshold, protecting the vast majority of small, informal businesses.

4. Consumers, Regardless of Transaction Type

Individual customers are never charged MDR directly, whether they're sending a P2P transfer or paying a large merchant. The fee sits entirely on the merchant side of eligible transactions.

5. Government and Utility Payments With Special Treatment

Certain categories, including specified tax, education, and healthcare payments, are treated differently within the broader UPI framework, often with adjusted limits or fee structures reflecting their public-interest nature.

6. UPI App Usage Itself

Downloading a UPI app, linking a bank account, generating a QR code, or checking your transaction history carries no charge under this framework — the MDR only applies to the value moved in an eligible merchant transaction.

Who Is NOT Exempt

• Standard merchants receiving eligible P2M payments above ₹2,000 (0.4% MDR, capped at ₹300)
• Merchants in flat-fee categories like fuel, telecom, insurance, and railways (fixed per-transaction charge)
• Capital market intermediaries such as stockbrokers, on eligible transactions (separate, lower capped rate)

Why the Exemption List Is So Broad

Government estimates cited around the framework's announcement suggest the large majority of merchant UPI transactions by volume fall under the ₹2,000 exemption or the small-merchant protection, meaning the new charge is concentrated on a comparatively small slice of higher-value merchant activity.

A Simple Way to Remember It

If you're an individual sending or spending money normally — splitting a bill, buying groceries, paying a small vendor — you're almost certainly exempt. The charge is targeted at the merchant side of larger, established commercial transactions.

Frequently Asked Questions

Is there any scenario where a customer pays MDR directly? No, MDR is structured as a merchant-side fee under the current framework.

Does the exemption list apply uniformly across all UPI apps? Yes, the framework is set at the network level by NPCI, so it applies consistently regardless of which UPI app is used.

What if a small vendor exceeds the monthly exemption limit? Eligible transactions beyond the threshold would move to standard MDR treatment going forward.

Are recurring UPI Autopay payments exempt? They follow the same value and category-based rules as other P2M transactions.

Will more exemptions be added later? That depends on future government and NPCI decisions; it's worth following official updates for changes.

Explore More with FinVedik GoldBiz

Planning to buy gold from a small, trusted local jeweller? Many of them fall well within these exemption categories. Discover options near you on our Jewellery Hub.

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