Bhubaneswar, Aug. 5 -- The Centre is likely to allow banks and payment service providers to levy a Merchant Discount Rate (MDR) of 0.25% to 0.4% on UPI payments above Rs 2,000 made to businesses, while person-to-person (P2P) transactions are expected to remain exempt from the proposed charges.

The proposal comes through the Taxation and Other Laws (Amendment) Bill, introduced by Finance Minister Nirmala Sitharaman on Tuesday. The Bill is made to remove the existing restriction on levying MDR on notified electronic payment modes.

However, government officials clarified that no decision has yet been taken on when the proposal will be implemented.

According to official estimates, the Rs 2,000 threshold would cover only 5% of all UPI trans...