UPSC Prelims Practice Questions — Rajya Sabha clears two Bills; Minister says consumers will not pay UPI charges

Q1. The statutory bar that underpins the 'zero-MDR' regime applicable to BHIM-UPI and RuPay debit card person-to-merchant payments operates in which one of the following ways?

  • A. It empowers the Reserve Bank of India to cap the discount rate an acquiring bank may charge a merchant, the cap being fixed at nil for payments up to ₹2,000
  • B. It obliges every business above a prescribed turnover to offer the notified electronic payment facilities to its customers, a default attracting a daily penalty
  • C. It forbids a bank or a system provider from imposing any charge, directly or indirectly, on a payer or a beneficiary for payments made through the notified electronic modes
  • D. It commits the Government to reimburse acquiring banks for the discount forgone, the amount being shared with issuer banks and payment service providers

Q2. The zero merchant discount rate on BHIM-UPI and RuPay debit card transactions, in force since January 2020, was given effect through amendments to which one of the following pairs of provisions?

  • A. Section 18 of the Payment and Settlement Systems Act, 2007 and Section 269ST of the Income-tax Act, 1961
  • B. Section 10A of the Payment and Settlement Systems Act, 2007 and Section 269SU of the Income-tax Act, 1961
  • C. Section 25 of the Payment and Settlement Systems Act, 2007 and Section 271DB of the Income-tax Act, 1961
  • D. Section 10 of the Payment and Settlement Systems Act, 2007 and Section 269SS of the Income-tax Act, 1961

Q3. With reference to the Taxation and Other Laws (Amendment) Bill, 2026, consider the following: 1. It repeals and replaces the Income-tax (Amendment) Ordinance, 2026 promulgated in June 2026. 2. It amends the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007. 3. It extends income-tax exemption to the Bank for International Settlements on interest and capital gains arising from Government securities. 4. It amends the Reserve Bank of India Act, 1934 to vest in the Reserve Bank the power to notify merchant discount rates for retail payment systems. Which of the above is/are correctly identified?

  1. It repeals and replaces the Income-tax (Amendment) Ordinance, 2026 promulgated in June 2026.
  2. It amends the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007.
  3. It extends income-tax exemption to the Bank for International Settlements on interest and capital gains arising from Government securities.
  4. It amends the Reserve Bank of India Act, 1934 to vest in the Reserve Bank the power to notify merchant discount rates for retail payment systems.
  • A. 1 and 2 only
  • B. 2, 3 and 4
  • C. 1, 2 and 3
  • D. 1 and 4 only

Q4. As regards the Taxation and Other Laws (Amendment) Bill, 2026, the amendment to the Payment and Settlement Systems Act, 2007 — the provision that dominated the debate in Parliament — does which one of the following?

  • A. Makes the levy of a merchant discount rate mandatory on all person-to-merchant UPI transactions with effect from the beginning of the financial year
  • B. Vests in the National Payments Corporation of India the exclusive statutory power to fix and revise the merchant discount rate for every retail payment system
  • C. Permanently bars any charge on all electronic payment modes, including credit card transactions, by banks and payment system providers
  • D. Removes the existing linkage to the payment modes prescribed under Section 269SU of the Income-tax Act and lets the Central Government notify eligible modes separately

Q5. Which one of the following statements regarding the piloting and coverage of the Bankers' Books Evidence Bill, 2026 is correct?

  • A. It was piloted by the Ministry of Law and Justice, and its provisions apply exclusively to scheduled commercial banks regulated by the Reserve Bank of India
  • B. It was piloted by the Ministry of Electronics and Information Technology, and it covers all entities that maintain their records in a digital or cloud-based form
  • C. It was piloted by the Ministry of Finance, and the Central Government may by notification extend its provisions to entities operating in the financial sector
  • D. It was piloted by the Ministry of Corporate Affairs, and its provisions extend automatically to every non-banking financial company registered in India

Q6. Consider the following statements comparing the Bankers' Books Evidence Bill, 2026 with the Bankers' Books Evidence Act, 1891: 1. The 2026 Bill repeals and replaces the 1891 Act while retaining most of the existing provisions. 2. Under the 2026 Bill, 'bankers' books' covers records maintained in physical, electronic, digital, virtual or cloud-based form. 3. Unlike the 1891 Act, the 2026 Bill withdraws the protection available to bank officers, so that a court may compel any officer to produce the books and appear as a witness without a special order. Which of the statements given above is/are correct?

  1. The 2026 Bill repeals and replaces the 1891 Act while retaining most of the existing provisions.
  2. Under the 2026 Bill, 'bankers' books' covers records maintained in physical, electronic, digital, virtual or cloud-based form.
  3. Unlike the 1891 Act, the 2026 Bill withdraws the protection available to bank officers, so that a court may compel any officer to produce the books and appear as a witness without a special order.
  • A. 1 and 3 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q7. In the Rajya Sabha, where a member's statutory resolution disapproving an ordinance is listed together with the Bill replacing that ordinance, the business is transacted in which one of the following ways?

  • A. The Minister first moves the motion for consideration of the Bill, and the resolution is taken up only after the Bill has been passed by the House
  • B. The member in whose name the resolution stands moves it first, the Minister thereafter moves the motion for consideration of the Bill, and both are discussed together
  • C. The Chairman refers the resolution to the Committee on Subordinate Legislation, and the Bill is considered only after that Committee reports to the House
  • D. The resolution is detached from Government business and voted upon separately during the time allotted to Private Members' business in the following week

Q8. An ordinance promulgated by the President under Article 123 ceases to operate at the expiry of which one of the following, this being the outer limit of its life?

  • A. Six months from the date of promulgation, unless a Bill replacing it has been introduced in either House of Parliament before that date
  • B. Six weeks from the date of promulgation, irrespective of the date on which Parliament next reassembles for its session
  • C. Six weeks from the reassembly of Parliament, or earlier if resolutions disapproving it are passed by both Houses of Parliament
  • D. Fourteen days from the date on which the Bill replacing it is laid before the House in which it is first introduced

Q9. Which one of the following statements about the regulatory status of the National Payments Corporation of India is correct?

  • A. It is a statutory body constituted by the Payment and Settlement Systems Act, 2007 with exclusive jurisdiction over all retail payment systems in the country
  • B. It functions as an attached office of the Ministry of Finance, and each payment system it operates requires the prior approval of the Ministry of Electronics and IT
  • C. It is regulated by the Securities and Exchange Board of India as a market infrastructure institution, the Reserve Bank's oversight being confined to settlement finality
  • D. It is authorised by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 to operate retail payment systems including UPI and RuPay

Q10. The National Payments Corporation of India has been set up in which one of the following forms?

  • A. A not-for-profit company under Section 8 of the Companies Act, promoted by public sector, private sector and foreign banks
  • B. A wholly owned subsidiary of the Reserve Bank of India constituted in exercise of its powers under the Reserve Bank of India Act, 1934
  • C. A society registered under the Societies Registration Act, 1860 at the initiative of the Indian Banks' Association and its member banks
  • D. A statutory corporation set up by an Act of Parliament along with the Board for Regulation and Supervision of Payment and Settlement Systems

Q11. Which one of the following correctly brings out what a Financial Bill is, as distinguished from a Money Bill?

  • A. It is a Bill containing only provisions dealing with the matters set out in sub-clauses (a) to (f) of Article 110(1), and must be returned by the Council of States within fourteen days
  • B. It is a Bill which may be introduced in either House, and which the Council of States is competent to reject outright though not to amend in any manner
  • C. It is a Bill which contains provisions relating to taxation or expenditure but also deals with other matters, and which has to be passed by both Houses of Parliament
  • D. It is a Bill so classified by the Chairman of the Council of States at the time of its receipt, whose decision on the question of classification is final

Q12. With reference to the Merchant Discount Rate and the Government's incentive scheme for low-value BHIM-UPI person-to-merchant transactions, consider the following: 1. The Merchant Discount Rate is borne by the merchant and paid to the acquiring bank for processing a digital payment, and is not charged to the consumer. 2. Under the scheme, small merchants were paid an incentive of 0.15% of the transaction value on person-to-merchant transactions up to ₹2,000. 3. Large merchants were paid the same rate of incentive on their UPI person-to-merchant transactions irrespective of the value of the transaction. 4. The incentive is paid by the Government to the acquiring bank, which then shares it with the issuer bank, the payment service provider bank and the app provider. Which of the above is/are correctly identified?

  1. The Merchant Discount Rate is borne by the merchant and paid to the acquiring bank for processing a digital payment, and is not charged to the consumer.
  2. Under the scheme, small merchants were paid an incentive of 0.15% of the transaction value on person-to-merchant transactions up to ₹2,000.
  3. Large merchants were paid the same rate of incentive on their UPI person-to-merchant transactions irrespective of the value of the transaction.
  4. The incentive is paid by the Government to the acquiring bank, which then shares it with the issuer bank, the payment service provider bank and the app provider.
  • A. 1 and 2 only
  • B. 1, 2 and 4
  • C. 2, 3 and 4
  • D. 1 and 3 only