UPI MDR Calculator
Worried about the "UPI tax" on payments above ₹2,000? Here's the short answer: individuals never pay it. Enter a transaction below to see exactly who pays, how much, and why.
No MDR — ₹0
Is there really a UPI tax above ₹2,000?
No. From 15 October 2026, NPCI is introducing a Merchant Discount Rate (MDR) — not a tax — on certain UPI merchant payments above ₹2,000. The Finance Ministry has explicitly stated: "MDR is neither a tax nor a charge collected by the Government or NPCI." It is settled within the payment ecosystem (banks and payment providers) and is deducted from what the merchant receives, never added to what you pay. Person-to-person (P2P) transfers remain completely free at any amount, and roughly 96% of merchant transactions are unaffected because most small businesses fall under the exemption threshold.
Essential services: MDR = flat ₹5 per transaction
Mutual funds / securities: MDR = min(Amount × 0.02%, ₹300)
P2P transfers, payments ≤ ₹2,000, and small merchants: MDR = ₹0
UPI MDR rates from 15 October 2026
| Transaction type | MDR rate | Cap |
|---|---|---|
| Person-to-person (P2P), any amount | Free | — |
| Merchant payment (P2M) up to ₹2,000 | Free | — |
| P2M above ₹2,000 — standard merchant | 0.4% | ₹300 |
| P2M above ₹2,000 — small merchant (≤ ₹1 lakh UPI/month) | Free | — |
| Essential services (railways, telecom, insurance, fuel, education) | Flat ₹5 | — |
| Mutual funds, securities, stockbroking | 0.02% | ₹300 |
Source: NPCI circular and Finance Ministry press clarification, September 2026. Rates apply only to person-to-merchant (P2M) UPI payments — confirm your exact category with your bank or payment app before relying on this for business accounting.
Worked example: MDR on a ₹5,000 merchant payment
| Merchant type | MDR charged | Merchant receives |
|---|---|---|
| Standard merchant | ₹20 (0.4%) | ₹4,980 |
| Small merchant (exempt) | ₹0 | ₹5,000 |
| Essential services | ₹5 (flat) | ₹4,995 |
| Mutual fund / securities | ₹1 (0.02%) | ₹4,999 |
Common misconceptions
- "It's a new tax on UPI users." False. The Finance Ministry confirmed MDR is not a tax and is not collected by the government — it is an inter-bank settlement fee paid only by merchants.
- "I'll be charged extra when I pay via UPI." No. Whatever amount you enter to pay is exactly what leaves your account. The MDR is deducted from the merchant's payout afterward — your payment amount never changes.
- "All UPI payments above ₹2,000 are affected." No. Only person-to-merchant (P2M) payments are in scope. Person-to-person transfers stay free at any amount, and small merchants receiving up to ₹1 lakh a month via UPI QR remain fully exempt.