Traders and consumers alike were overcome by surprise at the new levy since the government had assured that UPI payments would not be taxed
In fact, the Petrol Dealers Association has issued an ultimatum and deadline of October 15 after which its members may discontinue accepting UPI payments if their demands are not met. If transaction charges are introduced, UPI could becoming a revenue-generator model for government like credit cards.
Association president Chetan Modi said, “Dealers adopted digital payments under the assurance of zero MDR. Penalising petrol pumps for driving digitisation makes operations unviable, leaving associations no choice but to demand an immediate, complete exemption or discontinue accepting UPI entirely. ” Modi added, “We have undertaken 60% digitalisation on PM Narendra Modi’s initiative. Viren Shah, president of Federation of Retail Traders Welfare Association, said people would devise ways around the new levy by splitting transactions into smaller amounts, paying to personal accounts rather than merchant accounts, greater use of cash and underreporting business receipts. “Additional costs will ultimately be passed on to the consumer,” he said. A businessman from Navi Mumbai said, “The government must clarify what compulsions led to this turnaround.
Mumbai: Traders say the imposition of the government’s new levy Merchant Discount Rate (MDR) on UPI payments will inevitably force them to relay the burden of this tax to the ordinary consumer. Cash payments will increase and opacity will cloud transactions. Imposing transaction fees on high-value fuel purchases will completely erode wafer-thin dealer margins amid escalating overheads. Traders and consumers alike were overcome by surprise at the new levy since the government had assured that UPI payments would not be taxed. Why should the shopkeeper bear this additional burden? Retailers are already facing pressure from online competition and large organised players. Adding even a small transaction cost on every digital payment further eats into their meagre margins. UPI was promoted as a simple, secure and efficient digital payment system. UPI transactions should remain free. It must also specify what measures it is taking to curb its official expenses. Politicians live the royal life while people suffer. The Indian public continues to bear costs of GST and the war in West Asia. There was no need to rock the boat by another inflationary step. Once again Gen Z may take to the streets — to oppose this levy. ”
Shah said, “We strongly oppose the finance ministry’s decision to introduce transaction charges on UPI payments, even if the levy appears small today. What is small today could become higher tomorrow.