Why in news
- President Droupadi Murmu granted assent to the Taxation and Other Laws (Amendment) Act, 2026, and the Payment and Settlement Systems (Amendment) Act, 2026.
Key terms
Merchant Discount Rate
The fee charged to a merchant by a bank for accepting payments through digital transactions.
Foreign Portfolio Investors
Passive investors holding foreign financial assets such as stocks and government securities in a domestic market.
Key points
- The Taxation and Other Laws (Amendment) Act, 2026 provides tax exemptions on interest income and capital gains for Foreign Portfolio Investors investing in Government Securities, replacing the June 2026 ordinance.
- The law provides regulatory certainty to foreign cloud service providers utilizing Indian data centres, aiming to boost domestic electronics manufacturing.
- The Payment and Settlement Systems (Amendment) Act, 2026 amends the parent 2007 legislation, empowering the Central Government to notify which digital payment modes remain exempt from charges.
- This gives statutory flexibility to modify or maintain the zero Merchant Discount Rate policy on Unified Payments Interface and RuPay debit card transactions.
Prelims facts
- The zero-MDR rule currently applies mandated free processing to UPI and RuPay debit card transactions.
- Tax exemptions on G-Sec returns for FPIs are aimed at deepening the sovereign bond market.
Mains discussion
- Discuss how regulatory certainty in digital payments balances consumer adoption with the financial sustainability of payment aggregators.
Source: Business Standard
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.
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2018 · Q6 · General Studies · 2 marks
Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news? -
2019 · Q67 · General Studies · 2 marks
Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of Indian stock market without registering themselves directly? -
2026 · Q99 · General Studies · 2 marks
Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India: 1. NBFCs cannot accept demand deposits. 2. All the NBFCs operating in India have to be registered with the RBI. 3. NBFCs form part of the payment and settlement system and can issue cheque drawn on itself. 4. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs. Which of the statements given above is/are correct? -
2026 · Q9 · GS III · 10 marks
Explain how fake news and disinformation pose threat to Internal Security and Public Order in Indian context? In this regard, discuss salient features of amendments in respect of Information Technology (Intermediatory Guidelines and Digital Media Ethics Code) Rules 2021. -
2023 · Q34 · General Studies · 2 marks
In India, which one of the following Constitutional Amendments was widely believed to be enacted to overcome the judicial interpretations of the Fundamental Rights?