Amendment to Taxation Act, Payment and Settlement Systems Act get President’s assent
The Taxation and Other Laws (Amendment) Act, 2026, and an Act further amending the Payment and Settlement Systems Act, 2007, received Presidential assent on 17 August 2026
The Taxation and Other Laws (Amendment) Bill, 2026 was passed by the Lok Sabha on 6 August 2026, and returned by the Rajya Sabha as a Money Bill
The legislation amends the Income-tax Act, 2025, the Finance Act, 2026, and Section 10A of the Payment and Settlement Systems Act, 2007
The amendment to Section 10A replaces the blanket ban on Merchant Discount Rate (MDR) charges on UPI/RuPay transactions with a framework where the Central Government can notify, by executive order, which electronic payment modes remain exempt from MDR
Article 111 — Presidential Assent to Bills
Article 111 of the Constitution requires that every Bill passed by Parliament be presented to the President, who may either grant assent, withhold assent, or (for non-Money Bills) return it once for reconsideration. A Bill becomes an Act only upon Presidential assent, which is when the receipt of assent for the Taxation and Other Laws (Amendment) Act, 2026 completed its legislative journey.
Key Details
- Article 111's proviso denies the President the power to return a Money Bill for reconsideration — assent for Money Bills is a formality once passed by Parliament
- The President cannot withhold assent indefinitely; the "pocket veto" (no time limit for decision) remains a debated but rarely used option
- Compare with Article 200/201 (Governor's assent to state Bills) which allows reservation for President's consideration
Because this was certified as a Money Bill, Presidential assent under Article 111 was procedurally the final and non-discretionary step after Rajya Sabha's return of the Bill to Lok Sabha.
Money Bill Procedure — Article 110 and Article 109
A Bill is certified as a "Money Bill" under Article 110 if it deals exclusively with matters like taxation, government borrowing, or the Consolidated Fund of India; such Bills follow the special procedure under Article 109, where the Rajya Sabha can only recommend (not reject or amend) changes within 14 days, after which Lok Sabha may accept or reject those recommendations.
Key Details
- Article 110(1) lists the exclusive criteria for a Money Bill (imposition/abolition/regulation of taxes, borrowing, custody of Consolidated Fund/Contingency Fund, etc.)
- The Speaker of the Lok Sabha has the final say in certifying whether a Bill is a Money Bill — a determination not open to challenge in ordinary legal proceedings under Article 122, though the Supreme Court has entertained limited judicial review in some cases (e.g., the Aadhaar Act money bill controversy)
- Under Article 109, Rajya Sabha must return a Money Bill within 14 days; Lok Sabha is not bound to accept Rajya Sabha's recommendations
- The Taxation and Other Laws (Amendment) Bill, 2026 followed this Article 109 procedure, having been introduced in Lok Sabha and returned by Rajya Sabha before final passage
The Bill's passage through the Money Bill route explains why it moved quickly (Lok Sabha passage on 6 August, assent by 17 August) — the Rajya Sabha had no power to block or substantively amend it.
Merchant Discount Rate (MDR) and the Payment and Settlement Systems Act, 2007
MDR is the fee merchants pay to banks/payment system providers for processing digital transactions. Section 10A of the Payment and Settlement Systems Act, 2007 was inserted to enable a "zero-MDR" mandate on UPI and RuPay debit card transactions starting January 2020, aimed at boosting digital payment adoption by removing merchant-side transaction costs.
Key Details
- Zero-MDR on UPI/RuPay debit cards was implemented from 1 January 2020, referencing electronic modes notified under Section 269SU of the Income-tax Act, 1961
- The 2026 amendment substitutes this fixed cross-reference with a flexible clause empowering the Central Government to notify — by executive order — which electronic payment modes are exempt from MDR, rather than a blanket, legislatively fixed exemption
- Practical effect: merchant fees on UPI/RuPay are no longer automatically and permanently prohibited by statute; any future MDR reintroduction would require only an executive notification, not fresh legislation
- The Payment and Settlement Systems Act, 2007 is the principal law empowering the Reserve Bank of India to regulate and supervise payment systems in India (RBI designated as the regulator under Section 3/Section 4)
This is the substantive economic change behind the "Presidential assent" headline — it shifts India's zero-MDR policy from a rigid legislative mandate to a flexible, government-notifiable framework, with direct implications for UPI's cost structure and digital payments policy.
- Presidential assent date: 17 August 2026
- Taxation and Other Laws (Amendment) Bill, 2026 passed by Lok Sabha: 6 August 2026
- Money Bill procedure invoked: Article 109 read with Article 110
- Zero-MDR on UPI/RuPay debit cards originally implemented: 1 January 2020
- Provision amended: Section 10A, Payment and Settlement Systems Act, 2007
- Other laws amended by the same Act: Income-tax Act, 2025 and Finance Act, 2026 (covering FII/BIS tax exemptions on government securities income effective from 1 April 2026, and sector exemptions for electronics manufacturing, diamonds, data centres, and fund management)