New Delhi: Congress MP Jairam Ramesh has sharply criticised the government’s proposed changes to India’s digital payments framework under the Taxation and Other Laws (Amendment) Bill, 2026, alleging American heavy-handedness and trade pressure in influencing domestic policy decisions.In a scathing reply to Union finance minister Nirmala Sitharaman – who previously hit back at Ramesh for what she described as “spreading a canard” – the veteran Congress leader on Friday (August 7) reiterating his position that the bill dismantles Unified Payments Interface’s (UPI) statutory zero-fee guarantee, adversely affecting Indian customers.In his rebuttal, Ramesh argued that the government had failed to adequately answer why it was doing away with the legal guarantee of zero merchant discount rate (MDR) on UPI transactions and why it was especially doing so now. He pointed at the recent objections raised by the United States Trade Representative (USTR) as a potential catalyst for the move.The bill in questionThe Taxation and Other Laws (Amendment) Bill, 2026, proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007. The 2007 act presently bars banks and system providers from imposing any charge on transactions carried out through electronic modes of payment that are “prescribed under Section 269SU of the Income Tax Act, 1961.” This provision has kept UPI free of MDR since 2020.However, under the proposed amendment, this provision is replaced by a clause empowering the government to specify, by notification, “one or more electronic modes of payment” on which charges may apply. The change will come into effect from the date of publication in the Official Gazette.Even though the bill, in itself, does not impose a fee on UPI, it removes the default, law-backed protection against charges that UPI has enjoyed so far by giving the government the discretion to decide which payment modes remain free and which do not. The government will do so through executive notification and not via fresh legislation or having to return to the parliament.The eminence given to administrative decisions under the amendment is at the heart of the ongoing row.Congress argues legal protection is being removedOn Thursday (August 6), Ramesh took to social media to call out government’s attempt to alter the legal protection enjoyed by citizens under the existing 2007 act.“It paves the way for imposing a merchant discount rate (MDR), which could easily be applied in the future to all types of digital payments. The burden of this will ultimately fall on ordinary people, who may now have to pay even for using UPI,” he said.He argued that Narendra Modi-led government’s claim that the proposed amendment was the only method to keep UPI “financially sustainable” was false.“The Reserve Bank of India (RBI) has sufficient capacity to maintain the UPI system on a financially sustainable basis without imposing any additional fees on merchants or consumers,” he wrote on X, “In 2025-26, the RBI had transferred a surplus of Rs 2.86 lakh crore to the Modi government. Just a small portion of this amount would be enough to support this vital digital public infrastructure.”The USTR angleRamesh’a argument also pointedly highlighted the suspicious timing of the development. Linking the amendment to the USTR’s 2026 National Trade Estimate Report, which criticised India’s zero-MDR policy and the government backing for RuPay, he alleged that the country’s fee-free structure disadvantaged global card networks such as Visa and Mastercard in competing for market share, thereby, prompting pressure from the United States.Furthermore, he made mention of US President Donald Trump’s repeated claims of “pressurising the Modi government into securing a sudden ceasefire during Operation Sindoor by threatening American tariffs,” adding that the Trump administration has had significant impact on India’s trade and imports decisions in the past.“We also know that the Modi government, bowing to President Trump’s bullying, accepted a trade agreement between India and the United States that was widely regarded as unfair and which particularly sacrificed the interests of our farmers and small businesses,” he said.Sitharaman’s reply to RameshSitharaman dismissing Ramesh’s criticism as a “canard” on Thursday (August 6), argued three main points.First, she said that MDR, as and when decided, would apply only to merchants and not to end users or customers and that the resulting revenue would help banks and fintech firms invest further in infrastructure, innovation and security. The claimed that these benefits would ultimately flow through to all UPI users.Second, she noted that the National Payments Corporation of India-led UPI and Services Steering Committee is yet to take a decision on MDR and that the same would only be done after the parliament passes the amendment to Section 10A.Lastly, Sitharaman said “all this could have been discussed on the floor of the house” had the opposition engaged more constructively when the bill was tabled in the Lok Sabha and Rajya Sabha.‘Five dubious claims’Responding to Sitharaman, Ramesh on Friday (August 7) put forth “five dubious claims” underlying her defence of the bill.About the claim that MDR does not affect customers, Ramesh asserted that merchants routinely pass on transaction costs to consumers through pricing and that the same would happen with UPI, inevitably impacting customers.He also countered Sitharaman’s claim that MDR would fund infrastructure investment and said that UPI was conceived as a public digital good, which the government has a duty to protect.“Zero MDR was absolutely crucial to its (UPI’s) success, as it enabled small shops and roadside vendors to make and receive payments without any transaction charges. There are better alternatives available. The RBI has the capacity to support the UPI ecosystem without charging fees to merchants or consumers. So why isn’t this option being considered?,” he said.On the claim that the Steering Committee has yet to decide on MDR, he said that policymaking must account for the future and not merely the present. A system based on government notification offers far weaker protection than one anchored in statute, especially when, he said, the earlier assurances of retaining zero-MDR are being reversed.Once again raising the question of the amendment’s timing relative to the USTR report, he cited the example of Brazil’s Pix system, a similar, free and state-run instant payments platform, that reportedly continues to receive firm policy backing from the Brazilian government despite also being criticised in the USTR report.Finally, regarding the claim that the parliament offered sufficient space for debate, Ramesh placed the blame for the session’s disruptions on the government itself, saying that it had failed to hold the Union home minister Amit Shah accountable for issuing a statement of severe police action against peaceful student protesters last month.“It is precisely because of the Modi government’s evasion of accountability that this chaotic situation arose in the House, and then, taking advantage of that very situation, the Modi government got this bill passed by voice vote in the Lok Sabha within minutes of its introduction,” said Ramesh.