Parliament Passes Taxation And Other Laws Amendment Bill, Amends Statute On Digital Payment Charges

Parliament has passed the Taxation and Other Laws (Amendment) Bill, 2026, which makes several tax-related changes and also changes the rules governing charges on electronic payments.

The amendment could open the door for charges to be imposed on UPI transactions in the future.

The Rajya Sabha passed the Bill on Tuesday and sent it back to the Lok Sabha, which had already cleared the legislation. This completes the parliamentary process.

The bill changes the way the government decides which digital payment methods cannot be charged by banks and payment system providers.

At present, Section 10A of the Payment and Settlement Systems Act, 2007, bars banks and payment system providers from imposing charges on electronic payment modes prescribed under Section 269SU of the Income-tax Act. UPI and RuPay debit cards are currently among the payment modes covered by this protection.

The amendment removes the reference to the Income Tax Act and instead allows the Central Government to decide, through a notification, which digital payment modes will remain protected from charges.

In other words, the protection against charges will continue, but the government will now have to specify which payment modes will receive it.

The amendment replaces the existing reference in Section 10A to “the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961” with “one or more electronic modes of payment as the Central Government may, by notification, specify”.

The change will take effect once the law is published in the Official Gazette.

The amendment does not itself impose any charge on UPI or other digital payments. Section 10A will continue to prohibit banks and payment system providers from imposing charges, either directly or indirectly, on people making or receiving payments through the digital payment modes notified by the Central Government.

The key change is that UPI and other payment modes will no longer be protected simply because they are prescribed under the Income-tax Act. Their protection will depend on whether the Central Government includes them in its notification under the Payment and Settlement Systems Act.

The bill also repeals and replaces the Income-Tax (Amendment) Ordinance, 2026, and makes further amendments to the Income-Tax Act, 2025.