Will you levy air usage charge on flying cars?

Indiarsquos Unified Payments Interface UPI has transformed the way individuals and businesses make payments Under the proposed framework PersontoPerson P2P transactions will remain free irrespective of the amount involved Merchant payments up to Rs 2000 will also continue to be free Merchant Discount Rate MDR will apply only to specified PersontoMerchant P2M transactions exceeding Rs 2000 with the objective of creating a sustainable revenue model for the UPI ecosystemThe transformationIndia has 49 per cent market share of UPI transactions Brazil being the next The Indian digital landscape has transformed the otherwise cash currency exchange model into UPIbased payments This has been free for customers all these yearsThe UPIs have been making their revenues by securing fixed commissions or interchange fees from merchants and cashback etc Further the UPIs have also been making their amounts from the floats lying with them between customer payin and merchant payout periodsThe success of this system has been manifested in rural youth inclusion in the digital payments mode The paanwallas and small vegetable vendors in the interiors are all completely handson with UPI The processes have a significant safety net around them too thanks to the robust regulatory and structural initiatives by the Government of India Bringing in any reforms and adding charges for specified transaction amounts in excess of R2000 between person to merchants is discouraging in todayrsquos newage digital India from October 15 2026The challengespound Every time a payment is made the person will need to check if they are liable for any chargepound Users may resort to splitting transactions which is not good from a fiscal reporting point of viewArguments in favourpound This is applicable to large merchants and ecommerce platforms onlypound This is being done to enhance the UPI infrastructure and players withinJust like physical infrastructure is paid for from our taxes such as the Goods and Services Tax GST these digital infrastructure costs can also be budgeted out from the final revenues we thinkThe questionspound Are we going to say tomorrow there will be an ldquoantiMythos chargerdquo that will be made liable to citizens for developing and enhancing such infrastructurepound The R5 charge on railways telecom insurance premiums etc above R2000 is complete backdoor taxationpound Japan has reduced their GST rates on certain essential items to one per cent whereas India continues to charge a high GST of 5 per cent on essential items of food dairy personal care Honourable Finance Minister N Sitharaman madam why not reduce these rates to one per cent when you are bringing backdoor charges like MDRFly buyIn future when we have flying cars will there be a tax factored in by way of GST or will the government again come out with an air usage charge based on signals crossedEvery time there is successful implementation of an innovation there is a backdoor tax though not directly on individual consumers in this case on the sameConcerns and challengespound May encourage splitting of transactions to remain below the R2000 thresholdpound Possibility of payments being routed through personal UPI IDs instead of business accountspound Risk of indirect cost burden ultimately being passed on to consumerspound Possibility of increased preference for cash transactions in certain sectorspound Continued consumer confusion regarding MDR and transaction charges may require further awareness initiativesThe conclusionThe governmentrsquos intent to ensure the financial sustainability of Indiarsquos rapidly growing UPI ecosystem is commendable However while designing such a framework it is equally important to ensure that behavioural incentives do not weaken transparency and digital records A balanced approach that preserves the principle of lsquoOne Payment One Digital Recordrsquo while ensuring sustainability of the payment ecosystem will help strengthen public confidence in UPI and further Indiarsquos digital economy goalsCA Dr Mitil Chokshi is senior partner Chokshi amp Chokshi