UPI MDR Postponed Until After Diwali: What the NPCI Delay Means for You
The 0.4% MDR on specified merchant UPI payments above ₹2,000 will NOT start on 15 October 2026. On 13 October 2026, NPCI said it will be implemented immediately after Diwali, on a date to be notified separately. P2P transfers and merchant payments up to ₹2,000 remain free.
UPI charges 2026 — full guide →At a glance
- Original start date
- 15 October 2026
- New start date
- After Diwali — to be notified
- Rate (as announced)
- 0.4% above ₹2,000
- Cap (as announced)
- ₹300 per transaction
- P2P transfers
- Still free
- Is it a tax?
- No — a merchant charge
What NPCI announced
On 13 October 2026, the National Payments Corporation of India (NPCI) said that, keeping in mind the festive season, the UPI and Services Steering Committee decided that MDR on select person-to-merchant (P2M) UPI transactions will be implemented immediately after Diwali. The new implementation date will be notified later.
NPCI media statement, 13 October 2026, as reported by The Economic Times and Reuters.
✓ Official source — NPCI — Press releases · View · Verified 13 October 2026
The MDR framework was announced on 15 September 2026 and was scheduled to take effect on 15 October 2026. Some media reports suggest the second week of November, but NPCI has not yet notified a date. Until it does, no MDR applies under this framework. See the rule change tracker for the latest status.
What has not changed
| Payment | Before the delay | After the delay |
|---|---|---|
| P2P transfers (person to person) | Free | Free — unchanged |
| Merchant payments up to ₹2,000 | Free | Free — unchanged |
| Specified merchant payments above ₹2,000 | 0.4% MDR from 15 Oct 2026 | 0.4% MDR after Diwali, date TBA |
| Cap on MDR | ₹300 per transaction | ₹300 per transaction (as announced) |
| Eligible small merchants | Exempt | Exempt (as announced) |
Why it was postponed
The original date fell in the festive shopping season, when spending peaks. According to reports, retailer and distributor groups, including the All India Mobile Retailers Association and the All India Consumer Products Distributors Federation, asked for a delay. Some also asked for a higher small-merchant exemption threshold and for merchant-to-merchant payments to be exempt. NPCI has not announced any changes to the rate, cap or exemptions.
Report on the representations from merchant groups.
✓ Official source — The Economic Times · View · Verified 13 October 2026
Is UPI MDR a tax?
No. MDR (merchant discount rate) is a payment-processing charge within the merchant and banking ecosystem. It is not income tax, GST or any government levy. Whether money you receive through UPI is taxable is a separate question — see the UPI tax guide and UPI tax limit.
What merchants should do
- Watch for NPCI's notification of the new start date and for messages from your acquiring bank or payment app.
- Check with your bank or payment provider whether you are classified as an eligible small merchant.
- Use the UPI charges calculator to estimate the charge on transactions above ₹2,000 once it applies.
Frequently asked questions
Will UPI charges start on 15 October 2026?
No. NPCI deferred the MDR rollout on 13 October 2026. It will be implemented after Diwali on a date to be notified.
When will UPI MDR start now?
NPCI has said 'immediately post Diwali' and that the date will be notified separately. Some media report the second week of November, but no official date has been notified yet.
Will I pay a charge to send money to friends on UPI?
No. P2P transfers remain free under the framework.
Has the 0.4% rate or ₹300 cap changed?
NPCI has announced only a change of date. The rate, cap and exemptions remain as announced in September 2026.
Sources and verification
Facts on this page are checked against official sources — NPCI, RBI, the Income Tax Department, the Ministry of Finance, PIB and the GST portal. See the full list on the official sources page, the fact-checking process, or report an issue through corrections. Last verified: 13 October 2026.
Related pages
This page is educational information, not professional tax, legal or financial advice. Rules can change — verify against the latest official notification or consult a qualified professional before acting.