UPI Transactions Tax : Unnecessary And Against India’s National Interests , Not The End Of American Pressures
Rajiv Upadhyay
UPI Payment System was the modern Taj Mahal of India . . Scores of foreign dignitaries including in G 20 etc were shown this crown jewel where a vegetable vendor in some street could get payment from mobile just by scanning the QR code . You could travel in anywhere in India with just a mobile phone . Cash was truly becoming redundant . This system was superior to any foreign system . In 2025 alone 225 billion transactions were done in India using this free payment system .
It had enormous potential . By 2026 eleven countries had accepted this system . There is no such well proven and matching system in the world . It could have made sending money to India from abroad much easier and cheaper for NRIs.
It is absolutely inexplicable, why the government of India has decided to clip this system by imposing an utterly unwanted transaction tax . Seemingly free limit of Rs 2000/ is really not valid because even a solo mother dairy booth sale is about 30000 rupees a day . All transactions are below the limit . But the booth owner free limit of Rs 100000/ month is the catch . Mother dairy gives 35 paisa per litre commission on milk and 5 % on rest of the dairy products . So if the mother dairy booth owner will pay 0.4 % tax on sale , at sixty five rupees a litre it is 26 paisa out of the total commission of 30-35 paisa . Same is true of small kirana shops though their profit margins are higher .
Will he demand cash payment or not ?
This is the national tragedy . The greatest achievement of the government of moving towards cashless open society has been sacrificed for peanuts . In India, income tax revenue is still about 22% % of budget . In west it is about forty percent . We were moving towards an honest society which this move will reverse . A total expenditure of Rs 4000 crore was saving government far more and was utterly affordable .
We will start carrying cash in purse again . So we will withdraw say Rs 50000 / month cash from bank . This will reduce cash availability of banks and their loan disbursal will reduce . Government can reduce the cash limit but safety of banks will reduce .
Keeping higher limits for essential sectors like Railways etc is ok . But at the end of the day a question remains unanswered ‘ why government painted its Taj Mahal black ?
The answer lies in pressure from American Credit Card aggregators like VISA and Master Cards . Free UPI was threatening credit card companies as shopping in India was shifting to UPI . The VISA / Master cards were getting a cut from all shopping done with credit cards . Many shops were charging ( illegally ) two percent extra if payment was made by credit card particularly for low margin items . Ru pay card was cheaper than foreign cards . Also payment of profits to foreign card companies was a drain on our foreign exchange . So UPI was like import substitution. Government is making RuPay debit card transactions free . It will partly offset the extra cost .
VISA / Master card companies have been protesting from 2018 first against RU Pay card and later against UPI Payments . But interestingly their profits in India were increasing as the young generation had moved to EMI payment on credit card loans for luxury items like Apple phone . Though these companies do not publicly reveal profits made in India . Indian operation is often linked with say Singapore . Globally their profits are increasing .
From unofficial estimates the increase in profits of VISA / Master card is given below .(CGPT )
| Financial year | Mastercard India Services – revenue | Mastercard India Services – PAT | Visa Consolidated Support Services India – revenue | Visa India – PAT |
|---|---|---|---|---|
| 2015-16 | — | — | — | — |
| 2016-17 | — | — | — | — |
| 2017-18 | — | — | — | — |
| 2018-19 | — | — | — | — |
| 2019-20 | — | — | 944 | 125 |
| 2020-21 | — | — | 1,014 | 153 |
| 2021-22 | — | — | 1,346 | 168 |
| 2022-23 | 888 | 40 | 2,188 | 233 |
| 2023-24 | 1,004 | 49 | 2,812 | 334 |
| 2024-25 | 1,149 | 98 | 3,355 | —* |
*I have not inserted a Visa FY2025 PAT figure without verifying the audited accounts; the FY2025 revenue of ₹3,355.35 crore is reported from the filed financial information.( CGPT)
The Mastercard figures for FY2023–FY2025 come from the reported financial history of Mastercard India Services Pvt. Ltd.: revenue rose from ₹888.32 crore to ₹1,003.65 crore and then ₹1,148.57 crore; PAT rose
So really it is a baseless complaint but we have surrendered to their bullying . Our government has excellent record of not succumbing on Russian oil or trade deal . So if it has chosen to give up UPI advantage it might be bargaining for some thing bigger . But American appetite is unending.
To a layman it is a surrender to American pressure against our national interest .
