UPI fee collection for tutors, and what changed on 15 October 2026
From 15 October 2026 NPCI applies a merchant fee of 0.40 percent, capped at ₹300, on person-to-merchant UPI payments above ₹2,000. Person-to-person payments stay free, and small merchants receiving up to ₹1 lakh a month stay free as well. A private tutor collecting ₹30,000 or ₹50,000 a month sits inside that free band, so for most home tutors nothing changes.
What actually changed
UPI ran with no merchant discount rate for six years. From 15 October 2026 that ends for part of the system. Reported from NPCI's announcement, the structure is:
| Payment type | Fee |
|---|---|
| Person to person | Free |
| Person to merchant, up to ₹2,000 | Free |
| Person to merchant, above ₹2,000 | 0.40%, capped at ₹300 |
| Small merchants, receiving up to ₹1 lakh a month | Free |
What it means for a private tutor
Work it out on real numbers. A tutor with 12 students at ₹2,500 collects ₹30,000 a month. A tutor with 20 students at ₹2,500 collects ₹50,000. Both sit well under the ₹1 lakh monthly threshold, so both stay in the free band.
The tutors who cross ₹1 lakh a month are running something closer to a small coaching centre, usually 40 students or more. They are also the tutors for whom a per-transaction fee is a rounding error against the time collection takes.
The part worth paying attention to
The threshold is measured on what you receive through UPI in a month, not on what you declare. Once a tutor's collections start approaching ₹1 lakh, two things become worth knowing at the same time: whether the merchant fee applies, and whether the GST registration threshold for services, which is ₹20 lakh a year in most states, is anywhere in view.
Neither is a reason to avoid collecting on UPI. Both are a reason to have the month's collections in one place rather than scattered across a notebook and a bank statement.
Should a tutor use a UPI ID or a payment gateway?
Your own UPI ID
Free, instant, and the money lands in your bank account directly. The drawback is that you have to tell each parent the ID, the parent has to type the amount, and you have to match the credit to the student by hand at the end of the month.
A payment link
The link opens the parent's payments app with the amount already filled, and the payment can be tied back to a specific student and month automatically. This is what removes the reconciliation work, which for most tutors is the real cost, not the fee.
FeeSaathi supports both. You connect your own UPI ID or your own Razorpay account, and the money settles to you. FeeSaathi never holds the fee and takes no cut of it.
Questions tutors ask
Does a tutor have to pay UPI charges now?
Not if they receive up to ₹1 lakh a month through UPI. That band is explicitly exempt, and most independent tutors sit inside it.
Is the fee paid by the tutor or the parent?
NPCI's published structure sets the rate and the thresholds. Who bears it in practice depends on the payment provider's terms, so check with yours.
Is UPI still free for person-to-person payments?
Yes. The change applies only to person-to-merchant payments above ₹2,000, and small merchants under ₹1 lakh a month are exempt.
Do I need a current account or a business UPI ID to collect fees?
No. Many independent tutors collect on a personal UPI ID. A payment link through a gateway gives you per-student tracking, which is a bookkeeping benefit rather than a legal requirement.
Does FeeSaathi take a cut of the fee?
No. The payment settles to your own UPI or Razorpay account. FeeSaathi never touches the money.
Try it on your own students
Add your students, tap once, and every parent gets a WhatsApp reminder with your UPI link. Free for your first 10 students, no card.
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