
The immediate backdrop is the wider economic shock tied to the active military confrontation that began in March 2026 after coordinated U.S.–Israeli strikes on Iranian infrastructure: those strikes and Iran’s subsequent military responses disrupted oil and supply chains, pushed up global energy and insurance costs, and contributed to renewed inflationary pressure and balance‑of‑payments scrutiny in large importers including India.
Domestically, that macroeconomic stress has sharpened debate in 2026 over revenue measures, cost‑recovery for digital infrastructure and the distributional effects of levies on small businesses and consumers. Those pressures play out against a regulatory architecture governing payments set by statute and by industry bodies.
Advocate Anjan Datta has moved the Supreme Court in a public interest litigation challenging the Centre’s decision to levy a 0.4% merchant discount rate (MDR) on Unified Payments Interface (UPI) person-to-merchant transactions above ₹2,000.
The petition specifically contests the government’s September 14 notification and the MDR framework announced on September 15, saying the charge was imposed without adequate statutory safeguards, transparency or public consultation (per thehindu.com).
The policy, as set out in the government notices, exempts UPI payments up to ₹2,000 from any MDR but makes transactions above that threshold subject to the 0.4% fee, and is stated to take effect from October 15 (per thehindu.com).
The petitioner argues that introducing a broad levy on everyday digital merchant payments requires parliamentary oversight or clearer rule-making authority and that stakeholders were not sufficiently consulted before the notification and framework were issued (per thehindu.com).
The government framed the change as a structural fee on person-to-merchant flows above a set threshold, but the PIL frames it as a procedurally flawed executive action that could raise costs for small merchants and consumers; the source documents the petition and the government’s published notification without including a government legal justification beyond the notices themselves (per thehindu.com).
With implementation slated from October 15, the case could force the court to evaluate whether the executive followed required procedures and statutory limits when altering fees on a widely used payments rail; the source does not report any interim orders from the court or a government response to the PIL at this stage (per thehindu.com).