Union Finance Minister Nirmala Sitharaman on Monday said Merchant Discount Rate (MDR) charges on Unified Payments Interface (UPI) transactions will not be passed on to consumers. She said the charges are levied between payment service providers to improve the system and ensure better services.

Sitharaman accused opposition parties of spreading misinformation about the MDR framework and attempting to mislead the public.

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"It does not apply to transactions below Rs 2,000. It is neither a tax nor a cess; the funds will not be deposited into the Consolidated Fund of India. It is a charge levied by service providers to improve the system and provide better service, not for small transactions. Moreover, it is a charge between operators; it will not be passed on to the consumer. The burden does not fall on the customer," she told ANI.

"I provided a clarification on this very point when the issue was raised during the parliamentary session. Spreading misinformation, fueling debates based on it, and using that narrative to attack the government has become a habit for the opposition. This is wrong; there is an effort to spread misconceptions and mislead the public. The public needs to remain vigilant," Sitharaman added.

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The National Payments Corporation of India (NPCI) introduced a new MDR framework on September 15. Under the framework, a 0.4% MDR will apply to person-to-merchant (P2M) UPI transactions above Rs 2,000, subject to a cap of Rs 300 per transaction.

The government has said that around 96% of P2M transactions will remain unaffected. The MDR will be distributed among participants in the payment ecosystem, including banks and payment application providers. Consumers will continue to use UPI free of cost.

Sitharaman also criticised the mimicry at Congress leader Rahul Gandhi's 'Chhatron Ki Goonj' event in Indore.

"It is in very poor taste and disrespectful to the constitutional position of the Leader of the Opposition to stand with such people and encourage them. While freedom of speech is essential for our democracy, mocking in this manner is in bad taste; the Leader of the Opposition should not have been there encouraging such behaviour," she said.

Responding to allegations by the Aam Aadmi Party (AAP) government that Punjab was being discriminated against in the allocation of funds by the Centre, Sitharaman said no state was being treated in a way that caused it financial loss or undue hardship.

She accused the AAP government of making such allegations to divert attention from its performance.

"I can stand anywhere and state this confidently, looking anyone straight in the eye. There are no cuts or reductions in the funds due to a state based on its entitlements; we release the payments on time," she said.

"Therefore, making such baseless allegations is wrong. Perhaps because elections are approaching in Punjab, they are making such statements to gloss over their own non-performance," she added.