D. K. Shivakumar Calls for Nationwide Congress Protest Against 0.4% UPI MDR ‘Modi Tax’

By Political Bureau, Bangalore Mail

BENGALURU — Pitching a fierce battle against the Union Government’s latest financial policy, Karnataka Chief Minister D. K. Shivakumar called on countrymen to protest in the streets today, spearheading widespread public demonstrations across Karnataka and coordinating with Congress leadership nationwide against the imposition of a 0.4% Merchant Discount Rate (MDR) on UPI transactions.

Terming the new levy a hidden “Modi Tax,” Shivakumar urged party cadres, small business representatives, and trade associations to protest , demanding an immediate repeal of the policy set to take effect on October 15, 2026.

What is the New UPI Policy?

The Union Ministry of Finance and the National Payments Corporation of India (NPCI) recently issued a notification ending the zero-MDR regime that has governed digital payments since January 2020. Under the new framework:

 Transaction Threshold: A 0.4% MDR will be levied on person-to-merchant (P2M) UPI transactions exceeding ₹2,000, with a fee cap set at ₹300 for transactions of ₹75,000 and above.

 Exemptions: Person-to-person (P2P) transfers and small-value merchant transactions under ₹2,000 remain completely free.

 Utility Capping: Critical sectors such as fuel, telecom, railways, and agritech carry a fixed ₹5 transaction cap instead of the percentage fee.

While the Ministry of Finance clarified that the charge is levied strictly on merchants and acquiring banks rather than individual consumers, the announcement sparked intense political pushback.

Shivakumar’s Charge: “An Indirect Tax on the Common Citizen”

Speaking to the press today in Bengaluru, D.K. Shivakumar stated that the policy undermines the core vision of a digital, cashless economy.

“The Modi administration built its entire digital narrative on free UPI access. Now, they are secretly squeezing local shopkeepers, startup owners, and consumers. Small businesses operating on paper-thin margins cannot absorb a 0.4% tax on sales above ₹2,000. Every merchant will inevitably pass this burden onto the end consumer through higher retail prices. This is nothing short of an indirect ‘Modi Tax’ on ordinary citizens who are already struggling under relentless inflation.”

Shivakumar further emphasized that while transactions over ₹2,000 make up a smaller proportion of overall UPI volume, they account for nearly 65% of the total monetary value processed across the network, making the fee impact substantial.

The National Opposition Stand

Shivakumar’s protest mirrors arguments raised by top Congress leadership, including party President Mallikarjun Kharge and Rahul Gandhi, who previously dubbed the move a “flip-flop” and accused the Centre of giving in to foreign commercial pressure. Senior leader Jairam Ramesh alleged that the 0.4% structure aligns with debit card processing fees to benefit multinational card giants that had expressed frustration over UPI’s dominant market share.

Union Government and BJP Counter-Response

The Bharatiya Janata Party (BJP) rejected the allegations, accusing the Congress of spreading misinformation. Central officials reiterated that individual bank-to-bank transfers remain entirely free and unlimited, noting that the merchant fee is essential to maintain cybersecurity infrastructure, prevent fraud, and sustain financial technology ecosystems across the country.

As Congress units gear up to stage demonstrations across state capitals, D.K. Shivakumar warned that the party will escalate protests to Parliament if the Central Government does not restore the zero-MDR standard before the October deadline.