FREE UPI MDR CALCULATOR

Split UPI payments below ₹2,000
to stay within the free threshold.

Payments above ₹2,000 can attract MDR. Split them into ₹1,999 or less — each split may fall below the charge threshold.

Split Your Payment Now
P2P Transfers
FREE
Any amount · No charges
P2M ≤ ₹2,000
FREE
No MDR below threshold
P2M > ₹2,000
0.4% MDR
Max ₹300 · From 15 Oct 2026

Split your UPI payment

Enter the total amount and we'll split it into payments below the MDR threshold — each payment stays under ₹2,000 so no charges apply.

Split each payment to
Keep below ₹2,000 to stay within the free threshold

Default ₹1,999 — one rupee below the ₹2,000 MDR threshold. This safety buffer avoids "<" vs "<=" bugs in bank IT systems. You can lower this, but cannot exceed ₹2,000.

%
%

Default values reflect the announced UPI P2M pricing framework. Adjust to model different scenarios.

How does splitting help?

Understanding UPI MDR and why splitting payments makes a difference.

Under the announced UPI pricing framework, merchant payments (P2M) above ₹2,000 can attract MDR of 0.4% (capped at ₹300). Payments at or below ₹2,000 remain free of MDR.

By splitting a larger payment into amounts of ₹1,999 or less, each individual transaction falls below the ₹2,000 threshold — meaning MDR may not apply to any of the split payments. For example, ₹10,000 split into 5 payments of ₹1,999 + 1 payment of ₹5 could potentially save ₹47.20 in MDR + GST compared to a single ₹10,000 payment.

MDR (Merchant Discount Rate) is a payment processing charge — not a government tax. It is paid by the merchant, not the customer. GST at 18% is additionally applicable on the MDR amount.

UPICalc does not process payments and does not determine MDR eligibility. This tool provides estimates for informational and educational purposes only.

For Customers

Understand how merchant fees work. If you choose to split a payment to help a local merchant, be aware that doing many back-to-back transactions consumes your daily bank transaction limit (usually 10-20/day) and may trigger anti-fraud locks.

For Merchants

Calculate your theoretical MDR costs. Compliance Warning: Deliberately requesting customers to break down a single large invoice into multiple smaller payments ("smurfing") to evade fees violates most Payment Gateway Terms of Service and can result in account blocks or held settlements. It also creates massive GST and accounting reconciliation headaches.

UPI MDR reference guide

A complete look at UPI merchant charges, thresholds, exemptions and the timeline — so you know exactly what applies and what doesn't.

Important: MDR is a merchant/payment ecosystem charge — it is not a government tax. The term "UPI Tax" circulating in public discussion is a misnomer. Customers are never charged MDR directly.

MDR cost by transaction amount (standard retail)

Transaction MDR (0.4%) GST (18%) Total cost Merchant receives
₹1,999₹0₹0₹0₹1,999.00
₹2,000₹0₹0₹0₹2,000.00
₹2,500₹10.00₹1.80₹11.80₹2,488.20
₹3,000₹12.00₹2.16₹14.16₹2,985.84
₹5,000₹20.00₹3.60₹23.60₹4,976.40
₹10,000₹40.00₹7.20₹47.20₹9,952.80
₹25,000₹100.00₹18.00₹118.00₹24,882.00
₹50,000₹200.00₹36.00₹236.00₹49,764.00
₹75,000₹300.00 (cap)₹54.00₹354.00₹74,646.00
₹1,00,000₹300.00 (cap)₹54.00₹354.00₹99,646.00

MDR cap of ₹300 is reached at ₹75,000 (₹75,000 × 0.4% = ₹300). All transactions of ₹75,000 and above incur a flat ₹300 MDR + ₹54 GST = ₹354 total.

MDR rates by merchant category

Category MDR rate Cap Notes
Standard retail / E-commerce0.40%₹300Most merchant transactions above ₹2,000
Small merchants (≤₹1L/month)0% (Free)—Protected under zero-MDR framework
Railways / IRCTCFlat ₹5.00₹5Thin-margin / essential sector
Fuel / Petrol pumpsFlat ₹5.00₹5Thin-margin / essential sector
Telecom & UtilitiesFlat ₹5.00₹5Thin-margin / essential sector
InsuranceFlat ₹5.00₹5Thin-margin / essential sector
Agriculture inputsFlat ₹5.00₹5Thin-margin / essential sector
Capital markets / Broking0.02%₹300Mutual funds, stockbroking, securities
P2P transfers0% (Free)—Always free, any amount
UPI AutoPay / e-Mandate0% (Free)—Explicitly excluded from 0.4% MDR

Key rules at a glance

Who pays MDR?
The merchant — never the customer
MDR is deducted from the merchant's settlement amount. Customers always pay the exact invoice amount — the government mandates that UPI users cannot be charged MDR or checkout surcharges.
Merchant settlement
Net settlement = Amount − MDR − GST
For a ₹10,000 payment: MDR ₹40 + GST ₹7.20 = ₹47.20 deducted. Merchant receives ₹9,952.80. GST-registered merchants can claim input tax credit on the 18% GST.
Small merchants protected
₹0 MDR if turnover ≤ ₹1 lakh/month
Merchants collecting up to ₹1,00,000/month via static or dynamic QR codes retain full zero-MDR protection. Eligibility is determined by the acquiring bank, not by transaction size.
MDR ecosystem
How the 0.4% MDR is shared
The MDR fee is distributed among: Issuing bank (~40%) for account maintenance & authorization, Acquiring bank (~30%) for merchant onboarding & settlement, and UPI app/PSP (~30%) for app infrastructure & security. NPCI receives nominal switching fees.

Timeline

2020 — Ongoing
Zero-MDR framework under Section 10A of the PSSA 2007 — all UPI transactions free of MDR.
2026 — Legislative amendment
Taxation and Other Laws (Amendment) Act, 2026 amended Section 10A of PSSA 2007, enabling targeted MDR through executive notification.
14 September 2026
Ministry of Finance (DFS) notification published — revised MDR framework specifying 0.4% rate, ₹2,000 threshold, ₹300 cap.
15 October 2026 — Go-live
Formal nationwide implementation of 0.4% MDR on specified P2M transactions above ₹2,000. P2P and small merchants remain exempt.

UPI transaction limits (2026)

Category Per transaction Daily limit Notes
Standard UPI₹1,00,000₹1,00,000Subject to individual bank limits
Hospital / Medical₹5,00,000—Enhanced limit for verified categories
Education fees₹5,00,000—School, college, university fees
Tax payments₹5,00,000—Income tax, GST payments
IPO / RBI Retail Direct₹5,00,000—Investments and gilt accounts
UPI Lite₹1,000₹10,000Max balance ₹5,000; does not count against main limit
UPI Lite X (offline)₹500₹10,000Near-field communication offline payments
New device / new account₹5,000—First 24 hours after linking
UPI Circle (delegated)₹5,000—Max ₹15,000/month per delegation
AutoPay (e-Mandate)₹15,000—₹1,00,000 for MF SIPs, insurance, credit card bills

Practical considerations for splitting

Bank limits
Daily transaction count caps
Most banks allow 10–20 UPI transactions per day. Splitting a large bill into many transactions may hit your daily limit or trigger anti-fraud locks. Check your bank's policy.
Multiple PINs
Each split requires UPI PIN entry
Every individual payment requires entering your UPI PIN. Splitting adds time and friction — consider whether the MDR savings justify the extra steps for smaller amounts.
GST credit
Merchants can claim input tax credit
GST-registered merchants can claim input tax credit (ITC) on the 18% GST charged on MDR. This effectively reduces the merchant's net MDR cost.
Over 95% of UPI merchant transactions are below ₹2,000 or processed by small merchants — meaning they incur ₹0 MDR under the current framework. The splitting strategy is most relevant for larger purchases at qualifying merchants.

GST on MDR — what merchants need to know

The 18% GST is charged on the MDR fee amount — not on your sale amount. GST-registered merchants can reclaim it.

Key clarification: GST does NOT apply to the payment itself. It only applies to the MDR processing fee charged to the merchant. Your customers pay zero extra GST for using UPI.
Example — ₹10,000 sale
How the deduction works
Sale amount: ₹10,000
MDR (0.4%): ₹40.00
GST on MDR (18%): ₹7.20
Total deducted: ₹47.20
Merchant receives: ₹9,952.80
GST-registered merchant
Claim ₹7.20 back via ITC
If you are GST-registered, you can claim the ₹7.20 GST back as Input Tax Credit (ITC) under Section 16 of the CGST Act, 2017.

Net real cost after ITC: ₹40.00 only
Not GST-registered?
Full ₹47.20 is your cost
Composition scheme dealers and unregistered merchants cannot claim ITC. The full MDR + GST amount is a sunk operational cost for them.

GST on MDR is classified under SAC 997159 (payment processing and settlement services). Your acquiring bank or payment aggregator should issue a monthly GST debit statement containing your GSTIN for ITC claims.

Official sources & legal references

The authoritative government documents, gazette notifications and regulatory circulars that govern the UPI MDR framework.

✓ ParliamentGovernment of India
Taxation & Other Laws (Amendment) Act, 2026

Primary legislation amending Section 10A of PSSA 2007. Presidential assent: 17 Aug 2026. Published in the Gazette of India Extraordinary.

 ✓ MinistryMinistry of Finance (DFS)
MoF Notification — F. No. 10/02/2026-BO.II

Dated 14 September 2026. Prescribes zero-MDR on UPI ≤ ₹2,000 and RuPay debit cards, and permits MDR on transactions above ₹2,000.

 ✓ NPCINational Payments Corporation of India
NPCI Circular NPCI/UPI/2026-27/044

Dated 15 September 2026. Formalises the 0.4% MDR, ₹300 cap, flat ₹5 for special sectors, 0.02% for capital markets, and ecosystem interchange rules. Effective 15 Oct 2026.

 ✓ JudiciarySupreme Court of India
WP(C) Diary No. 41829/2026

Constitutional challenge to Section 10A PSSA amendment. SC issued notice to Union, RBI & NPCI but refused to grant an interim stay on the Oct 15, 2026 implementation.

 ✓ PIBPress Information Bureau
PIB Fact-check — Release ID 218942

Official government clarification: consumers will not be charged MDR. Merchants cannot levy checkout surcharges on UPI payments.

 ✓ CBICGST Network / CBIC
CGST Act, Section 16 — ITC on MDR

GST-registered merchants can claim Input Tax Credit on the 18% GST paid on MDR. SAC code 997159 applies to payment processing services.

UPICalc is an independent informational tool. It is not affiliated with NPCI, RBI, or any government body. Always verify rules against the latest official circulars.

Frequently asked questions

Everything you need to know about UPI MDR, splitting, and charges.

How to avoid MDR fee on UPI?
The easiest way to avoid the MDR fee on UPI is to ensure the transaction amount is exactly ₹2,000 or less. If you have a large bill (e.g., ₹10,000), you can use a free MDR calculator like UPICalc to mathematically split the payment into multiple chunks below the ₹2,000 threshold. Since the fee applies per transaction, keeping each transaction under ₹2,000 triggers the zero-MDR protection rule.
Is there a free UPI MDR Calculator in India?
Yes. UPICalc is a completely free MDR calculator designed for Indian merchants and customers. It automatically accounts for the 0.4% charge, the ₹300 maximum cap, the 18% GST on the fee, and special zero-charge limits to show you the exact payment breakdown. (Often misspelled by users as a free MRD calculter or UPI tax calculator — this tool handles all those calculations for free).
What is UPI MDR?
MDR (Merchant Discount Rate) is the commercial processing fee charged by acquiring banks and payment aggregators to merchants for processing UPI payments. Under the announced framework, it's 0.4% of the transaction amount, capped at ₹300 per transaction. It is a payment ecosystem charge — not a government tax.
When does MDR apply?
MDR applies to specified person-to-merchant (P2M) UPI transactions above ₹2,000, effective 15 October 2026. Transactions of ₹2,000 or below remain free. Person-to-person (P2P) transfers are always free regardless of amount.
How does splitting payments help?
MDR is assessed per single transaction. By splitting a ₹10,000 bill into 5 payments of ₹1,999 + 1 payment of ₹5, each individual transaction stays below the ₹2,000 threshold — meaning ₹0 MDR per payment. This could save ₹47.20 compared to a single ₹10,000 transaction.
Why is the default split amount ₹1,999?
₹1,999 is one rupee below the ₹2,000 MDR threshold — a configurable safety buffer. You can set any amount from ₹1 to ₹1,999. The key is keeping each split payment strictly below ₹2,000. This is not an official UPI limit — it's simply a practical choice.
Who pays MDR — customer or merchant?
The merchant always pays MDR — it's deducted from the settlement amount. Customers pay the exact invoice amount. Government directives and NPCI rules mandate that merchants cannot charge customers MDR or add checkout surcharges for UPI payments.
Is MDR a tax?
No. MDR is a commercial payment processing charge, not a government tax. The term "UPI Tax" circulating in public debate is a misnomer. However, 18% GST is applicable on the MDR amount — so for ₹40 MDR, the GST would be ₹7.20, making the total cost ₹47.20.
What is the maximum MDR per transaction?
MDR is capped at ₹300 per transaction. The cap is reached at ₹75,000 (₹75,000 × 0.4% = ₹300). For any transaction of ₹75,000 or above, the total cost is ₹300 MDR + ₹54 GST = ₹354 maximum.
Where does the MDR money go?
The 0.4% MDR is shared among: Issuing bank (~40%) for account maintenance and authorization, Acquiring bank/aggregator (~30%) for merchant onboarding and settlement, and UPI app/PSP (~30%) like PhonePe, Google Pay, or Paytm for app infrastructure. NPCI receives nominal switching fees.
Are small merchants exempt?
Yes. Merchants collecting up to ₹1,00,000 per month via static or dynamic QR codes retain full zero-MDR protection. Eligibility is determined by the acquiring bank or payment aggregator — not by the customer or transaction size alone.
What about essential sectors (fuel, railways)?
Thin-margin and essential sectors — including Railways/IRCTC, fuel pumps, telecom, utilities, insurance, and agriculture — follow a separate flat ₹5 MDR per transaction above ₹2,000, instead of the standard 0.4% rate.
Does splitting have any practical limits?
Yes. Most banks allow 20–50 UPI transactions per day. Very large amounts split into many payments may hit daily limits or trigger anti-fraud locks. Each split also requires entering your UPI PIN. Consider whether the MDR savings justify the extra steps.
Can merchants claim GST credit on MDR?
Yes. GST-registered merchants can claim input tax credit (ITC) on the 18% GST charged on MDR. This effectively reduces the merchant's net MDR cost.
Is UPI free for person-to-person transfers?
Yes. P2P (person-to-person) UPI transfers remain completely free regardless of amount under the current framework. MDR only applies to specified merchant (P2M) transactions above ₹2,000.
Does UPICalc process payments?
No. UPICalc is a calculator and educational tool only. It does not process, initiate, or handle any UPI payments. It shows you how to mathematically split an amount and estimates potential MDR differences.