Short answer: under the NPCI wording, a fee of 0.4% applies on UPI payments to merchants above Rs 2,000, capped at Rs 300 per transaction, which applies from Rs 75,000. On a Rs 10,000 payment that works out to Rs 40. On Rs 2,500 it is Rs 10. On Rs 1,500 it is Rs 0, because the payment is not above Rs 2,000. Small merchants who take UPI QR payments to their own account, up to Rs 1 lakh a month, pay zero on all three. The start date is still to be notified.
What NPCI has said so far
NPCI says the fee on UPI payments to merchants above Rs 2,000 starts after Diwali, on a date NPCI notifies. The fee is 0.4% of the payment, capped at Rs 300 per transaction, which applies from Rs 75,000. Small merchants who take UPI QR payments to their own account, up to Rs 1 lakh a month, pay zero.
That is all this post works from. For the full background, the categories and the earlier timeline, read our guide to UPI MDR charges after Diwali 2026. If you prefer Hinglish, read UPI MDR kya hai.
How the sum works
There are only three steps for any one payment.
- Check the amount. If it is Rs 2,000 or less, the fee is Rs 0. Stop here.
- If it is above Rs 2,000, multiply the amount by 0.4%. That is the same as multiplying by 4 and dividing by 1,000.
- If the answer is above Rs 300, the fee is Rs 300, because of the cap.
And one check comes before all three: if your shop is a small merchant taking UPI QR payments to its own account, up to Rs 1 lakh a month, the fee is zero on every payment.
Three payments worked out
Example numbers, only to show the arithmetic. They are not a bill from any bank or app.
| Payment | Above Rs 2,000? | 0.4% of payment | Cap check (Rs 300) | Fee on this basis | Small merchant on UPI QR, up to Rs 1 lakh a month |
|---|---|---|---|---|---|
| Rs 1,500 | No | Not applied | Not needed | Rs 0 | Rs 0 |
| Rs 2,500 | Yes | Rs 2,500 x 4 / 1,000 = Rs 10 | Rs 10 is below Rs 300 | Rs 10 | Rs 0 |
| Rs 10,000 | Yes | Rs 10,000 x 4 / 1,000 = Rs 40 | Rs 40 is below Rs 300 | Rs 40 | Rs 0 |
Rs 1,500: no fee
Rs 1,500 is below the Rs 2,000 line, so the 0.4% is not applied at all. The fee is Rs 0 for every merchant, small or large.
Rs 2,500: Rs 10
Rs 2,500 is above Rs 2,000. 0.4% of Rs 2,500 is Rs 10. That is far below the Rs 300 cap, so the fee is Rs 10. For a small merchant on UPI QR, up to Rs 1 lakh a month to its own account, it stays at Rs 0.
Rs 10,000: Rs 40
Rs 10,000 is above Rs 2,000. 0.4% of Rs 10,000 is Rs 40. That is also below the Rs 300 cap, so the fee is Rs 40. For a small merchant on UPI QR, up to Rs 1 lakh a month, it stays at Rs 0.
What about GST on the fee?
Tax experts quoted by News18 say 18% GST is added on the fee. This is reporting, not a rule we have read (News18, 17 Sep 2026). Using the example numbers above, that would be Rs 1.80 on the Rs 10 fee and Rs 7.20 on the Rs 40 fee. Whether you can claim it back depends on your GST registration, so ask your CA.
Nothing is charged on this basis yet
The start date is still to be notified. So, on this basis, nothing is taken from your UPI payments yet, unless NPCI or your bank or UPI provider tells you otherwise. Treat the table as a way to understand the sum, not as a current charge.
What to do now
- Find out your category. Ask your bank or QR provider, in writing, whether your QR counts as a small merchant QR (up to Rs 1 lakh a month to your own account) or a regular merchant QR. Your answer decides whether the zero column applies to you.
- Look at last month’s UPI statement. Mark every payment above Rs 2,000. Payments of Rs 2,000 or less do not enter the sum.
- Work out one month as a test. Take 0.4% of each marked payment, apply the Rs 300 cap to any single payment, and add them up.
- Watch for the date. Read messages from your bank or UPI app carefully. If an SMS mentions MDR, check it against what NPCI has said.
- Keep payment checks separate. A fee question is different from a missing payment. If a customer says they paid and you got nothing, read UPI payment not received by merchant.
For card or net banking through a gateway, see payment gateway charges in India.
FAQ
How much UPI MDR is on a Rs 2,500 payment?
On the NPCI wording, 0.4% of Rs 2,500, which is Rs 10. A small merchant taking UPI QR payments to its own account, up to Rs 1 lakh a month, pays zero. The start date is still to be notified.
Is there UPI MDR on a Rs 1,500 payment?
No. The fee applies only to payments above Rs 2,000, so a Rs 1,500 payment carries Rs 0 for every merchant.
What is the highest MDR on one UPI payment?
Rs 300. The fee is 0.4% of the payment, capped at Rs 300 per transaction, which applies from Rs 75,000.
When does UPI MDR start?
NPCI says it starts after Diwali, on a date NPCI notifies. Until then, check with your bank or UPI provider before assuming any charge.
New here? Start with our Start here page.
About the author: Pritam Nandi is the founder of Prilix Labs, the company behind Indi Andaz. He builds Indi Andaz from Ashoknagar Kalyangarh, West Bengal, to help local Indian shops sell online and bill at the counter from one place.
Indi Andaz by Prilix Labs: an online store with UPI, card and COD checkout, plus GST billing at the counter.
Prilix Labs, Ashoknagar Kalyangarh, North 24 Parganas, West Bengal 743222
Email: indiandazsocial@gmail.com
Phone: 8653001257
© 2026 Prilix Labs
Leave a Reply