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21 August 2024 at 10:20:16 am

Fee Signal

The government’s decision to create a legal framework for levying charges on UPI transactions has understandably triggered concern, even though it insists that ordinary users and small merchants will continue to enjoy free payments. The proposed amendment does not impose a fee on UPI today. But it removes the statutory barrier to one being imposed in the future, making the government’s reassurance less than the final word. The government argues that this is a measure for UPI’s long-term...

Fee Signal

The government’s decision to create a legal framework for levying charges on UPI transactions has understandably triggered concern, even though it insists that ordinary users and small merchants will continue to enjoy free payments. The proposed amendment does not impose a fee on UPI today. But it removes the statutory barrier to one being imposed in the future, making the government’s reassurance less than the final word. The government argues that this is a measure for UPI’s long-term sustainability. The world’s largest real-time payments system, which processed 2,366 crore transactions worth Rs. 29.9 lakh crore in July alone, cannot indefinitely depend on subsidies as transaction volumes, cybersecurity requirements and infrastructure costs rise. A nominal Merchant Discount Rate on larger merchant transactions, it says, would help create a more sustainable ecosystem without burdening ordinary users. That argument has merit. But so does the concern that a payment system which became a national habit precisely because it was cheap and frictionless should not slowly acquire a price tag. Once the legal machinery for charging exists, there is no guarantee that the boundary between large merchants and small ones, or between merchants and consumers, will remain permanently fixed. The Finance Minister has clarified that any Merchant Discount Rate will apply only to a limited set of merchant transactions above a threshold and will be nominal, well below card-payment rates. The details will eventually be decided by the UPI and Services Steering Committee headed by the National Payments Corporation of India. In other words, there is no charge on the table for the ordinary UPI user today. But there is now a legal mechanism for charges to be introduced tomorrow. That is precisely why any alarm, though exaggerated, cannot simply be dismissed. The government, through its clarification, has reassured that UPI’s free-to-consumer model remains intact. The important issue is whether its financing model can evolve without undermining the habits that made it revolutionary. UPI succeeded partly because it made digital payments cheaper and simpler than alternatives. There is also a larger principle at stake. UPI is not merely another commercial payments platform. It is the product of public investment, regulatory architecture and private innovation. The state should therefore be wary of treating its sustainability as an ordinary market problem. The sensible answer lies between free-for-all subsidies and indiscriminate fees: transparent thresholds, genuinely low MDRs, strong protection for small merchants and an absolute firewall around ordinary consumers. The government should publish the economic case for any future charge, including its effect on merchants and consumers. UPI was built on trust as much as technology. The government is right to protect its remarkable achievement. It should remember that keeping UPI free is not merely a political promise. It is part of the product.

An Informed Vote Begins With Financial Literacy

When you cast your vote, you choose more than a political leader—you choose who will be entrusted with managing public money.

Bharat, a 28-year-old software engineer, walked into a polling booth to cast his vote with confidence. He followed political debates, watched campaign speeches, and regularly discussed current affairs with friends. But when someone asked him where his taxes went, how the government funded welfare schemes, or what rights he held as a taxpayer, he had no clear answer.


Bharat represents millions of educated Indians. While many actively participate in elections, only a few truly understand the financial system that runs the country. As a Chartered Accountant, I believe that every citizen must understand public finance before deciding who should govern the nation. Democracy is not merely about casting a ballot—it is about making informed choices.


Every government initiative, whether it is a new expressway, a public hospital, a subsidy, or a welfare programme, is funded by public money. This revenue comes from citizens through income tax, GST, customs duty, and corporate taxes. Even those who do not fall within the income tax bracket contribute indirectly whenever they purchase everyday goods or services. Therefore, every Indian has an inherent right to know how public funds are collected and utilised.


Seek Accountability

The Constitution grants citizens not only the right to vote but also the power to seek transparency and accountability from public institutions. Statutory frameworks like the Right to Information (RTI) Act reinforce this principle. Citizens should exercise these rights responsibly to evaluate whether public money is being spent efficiently and honestly.


From a financial management perspective, accountability is the bedrock of governance. In the corporate world, businesses prepare strict financial statements to explain how shareholders' money has been deployed. Governments must be held to the same expectation of transparency and fiscal discipline. Responsible budgeting, controlled public debt, efficient expenditure, and long-term economic planning are the truest indicators of good governance.


Unfortunately, many election debates focus entirely on grand promises and political slogans. A financially aware voter must ask deeper questions: How will these promises be funded? Will they increase the debt burden on future taxpayers? Will they generate sustainable economic growth or merely provide temporary relief? These are critical fiscal questions that every responsible citizen should consider, regardless of political preference.


Financial literacy also strengthens democratic independence. A citizen who understands taxation, savings, investments, inflation, and budgeting is less likely to be influenced by misinformation or unrealistic manifestos. This economic awareness enables people to evaluate policies objectively, basing decisions on hard facts instead of raw emotions.


Beyond Taxation

As financial professionals, our responsibility extends far beyond corporate taxation and auditing. We have a civic duty to promote financial awareness among citizens and encourage informed participation in public life. An economically literate society naturally demands better governance, greater transparency, and stronger institutional accountability.


Ultimately, an election is not just about choosing a political leader—it is about selecting the custodians of the nation's finances. Every vote directly influences taxation, public expenditure, infrastructure, employment, and the country's economic trajectory. Before casting a vote, every citizen should ask not only, "Who should govern?" but also, "Who will manage public money responsibly?" An informed vote is both a constitutional right and a financial responsibility.


(The writer is a Chartered Accountant based in Thane. Views personal.)

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