The Workers Rights 
UPI salary transfer will be free under new rules (2026). NPCI has announced a revised framework for UPI Merchant Discount Rate (MDR) effective from 15th October 2026 and P2P transactions such as salary transactions, remittances, peer-to-peer transactions etc will continue to remain free from MDR charges. The fee is 0.4% and it is applicable only on a few transactions where the amount is more than ₹2,000. If you are an employee, there is no change and you will continue to get your salary through UPI.
Quick Facts: UPI New Rules 2026
It is important to keep in mind the following:
| What You Need to Know | Detail |
| Effective Date | October 15, 2023 |
| Introduced By | NPCI (National Payments Corporation of India) |
| Charge Rate | For merchant UPI transactions above ₹2,000, the MDR is capped at 0.4%. |
| Max Charge | Maximum of ₹ 300 per transaction. |
| Salary Transfer | Free – no charge |
| Peer to Peer (P2P) | Free – no fees |
| Who PaysThe Fee | Not the employees or consumers, the merchants. |
| Exception for Small Merchants | Exempt upto income of Rs. 1 lakh per month. |
| Rural Transactions | Free – no costs |
What are UPI New Rules 2026?
UPI payment rules 2026 will be a narrow-spectrum fee model allowing only high-value transactions on the merchant side. This is not a blanket levy on all UPI transactions but is aimed specifically at Person-to-Merchant (P2M) transactions where the transaction values are more than ₹2,000.
Most importantly, the MDR (Merchant Discount Rate) is a fee that merchants charge.” For transactions above ₹2,000, businesses will have to pay 0.4% of the payment amount to their payment service providers, with a cap of ₹300. No deduction will be made from the payments by consumers or the salaries of employees for this fee.
Banks have been told they must make sure merchants don’t pass this on to customers. Moreover, UPI ‘app providers’ are also not permitted to levy platform charges along with the MDR template.
Will UPI Salary Transfer be Free in 2026?
Yes, absolutely. The MDR framework does not include UPI salary payments as it is specifically mentioned as Person-to-Person payment transactions. At the same time you can also transfer and receive funds through UPI without any charges. If your employer pays your salary in your UPI account you do not have to pay any charges.
The types of UPI payments that are free are:
- Timely monthly salary payments to employees through UPI.
- Any money paid directly to a person as a freelancer or contractor.
- Transfer of salary advance
- These reimbursements are credited to the employee’s bank account.
- People peer remittances
The individual user has maintained the no-cost experience that has helped UPI gain mass adoption.
Which UPI Payments Will Be Charged From 2026?
The new framework could apply to some payment scenarios that involve business accounts or merchant endpoints. Salary and p2p transfers are covered, but not all of them:
| Transaction Type | Charges Apply? | Notes |
| Transferring a salary (from employer to employee) | No | P2P — fully exempt |
| Rewarded to employees (direct transfer) | No | P2P — fully exempt |
| UPI QR payments for business exceeding ₹2,000. | Yes (merchant pays) | 0.4% MDR, capped at ₹300 |
| Other services (e.g., auto components, banks) > ₹500 | Flat ₹5 | Reduced rate applies |
| Trade of capital goods in the markets (MFs, stocks) | 0.02% MDR | Capped at ₹300 |
| UPI up to ₹1L/month is available for small merchants. | No | Exempt |
| Rural/semi-urban UPI QR payments | No | Exempt |
| Any amount of p2p transactions (P2P – any value) | No | Always free |
If you are a salaried person and paying bills personally then you are not going to be affected that much. The exemption is available only if you are self-employed or have a small business and accept UPI payments and it is based on how much you collect each month.
Why NPCI Introduced These UPI Charges?
The 2026 revision of UPI bank focuses on sustainability of infrastructure. UPI processed transactions worth ₹314 lakh crore in FY2025-26, which is over 24,000 crore transactions, a tremendous rise from 1.78 crore transactions worth ₹0.07 lakh crore at the time of its launch.
Funds arising from change in MDR shall be allocated to:
- Strengthening payment system resilience
- Cybersecurity and Theft Prevention.
- Improving rural access to UPI
- Improvements in customer service
It is interesting to note that 5% of the total MDR collections would be earmarked for a special fund to boost the acceptance of UPI amongst small and micro merchants.
FAQs – UPI Payment Charges for Employees in 2026
Q. Will my salary be deducted for UPI transaction charges?
No. Salary transfers are P2P transactions and are completely exempted from the new MDR framework.
Q. Where are the UPI charges coming from in 2026?
Merchants, or entities accepting payments above Rs.2,000 via UPI. No cost to consumers or staff.
Q. Can an employer deduct charges of UPI from the salary?
MDR charges should not be borne by individuals by banks.
Q. Is there any free UPI P2P transaction till October 2026?
Yup . The person-to-person UPI service is currently free of any charges and there is no limit on the amount of money that can be transferred.
Q. What if my employer pays me using a Business UPI ID?
Salary payments from a business account to employee accounts are still free (P2P).
Q. What about small business owners?
But businesses accepting payments through UPI QR codes up to ₹1 lakh are exempt. You cannot be charged until after that limit.
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