Nasscom Backs Tax Bill Easing Zero-MDR Rules and Extending Digital Infrastructure Relief
Nasscom says the Taxation and Other Laws (Amendment) Bill, 2026 could improve India’s data-centre competitiveness, selectively replace blanket zero-MDR requirements for UPI and RuPay, and extend electronics supply-chain tax relief through FY2040-41.
What happened
NASSCOM · Nasscom welcomed the Taxation and Other Laws (Amendment) Bill, 2026, which replaces blanket zero-MDR rules with selective government notifications,
Key facts
- FY2040-41
- 25%
- 10%
- 2026
Why this matters
Prioritize partnership and acquisition targets in domestic payments infrastructure, data centres and electronics manufacturing that can benefit from extended tax support through FY2040-41.
What to watch
- Final bill text, parliamentary passage, effective dates, and delegated rules for MDR notifications.
- Exact definitions of covered payment instruments, merchant size thresholds, transaction-value thresholds, and exempt categories.
- Whether MDR can be charged to merchants only, whether consumer surcharging is restricted, and any caps on acquirer or issuer fees.
- Budget allocations or reimbursement mechanisms for zero-MDR UPI and RuPay transactions.
- RBI, NPCI, and Ministry of Finance guidance on interchange, credit-on-UPI, RuPay credit cards, and settlement standards.
- Acquirer pricing announcements, especially from banks, payment aggregators, and large UPI PSPs.
- Eligibility conditions for data-centre and electronics supply-chain relief, including domestic-value-addition, location, investment, and employment requirements.
- Model payment acceptance P&L under category-specific MDR assumptions, separating UPI P2M, RuPay card, credit-on-UPI, and high-ticket transactions.
- Prepare acquirer and PSP contract negotiations around pass-through rules, interchange, fraud liability, settlement SLAs, and value-added service bundles.
- Avoid blanket checkout surcharges until final notification language clarifies merchant pricing, customer disclosure, and prohibited practices.
- Prioritise UPI reliability, reconciliation, fraud monitoring, and offline/low-connectivity acceptance, as monetisation pressure will raise service-level expectations.
- Review data-centre, cloud, POS hardware, and electronics sourcing plans for eligibility under extended tax-relief regimes; favour domestic suppliers where economics improve.
- Build merchant-segmentation strategy: use improved payment economics to fund acceptance and loyalty for small-format stores while negotiating lower blended rates for enterprise volumes.