diff --git a/contracts/handlers/FeeHandlerRouter.sol b/contracts/handlers/FeeHandlerRouter.sol
index e0e41eef..e87451c9 100644
--- a/contracts/handlers/FeeHandlerRouter.sol
+++ b/contracts/handlers/FeeHandlerRouter.sol
@@ -15,11 +15,16 @@ contract FeeHandlerRouter is IFeeHandler, AccessControl {
 
     // destination domainID => resourceID => feeHandlerAddress
     mapping (uint8 => mapping(bytes32 => IFeeHandler)) public _domainResourceIDToFeeHandlerAddress;
+    // whitelisted address => is whitelisted
+    mapping(address => bool) public _whitelist;
 
-    event FeeChanged(
-        uint256 newFee
+    event WhitelistChanged(
+        address whitelistAddress,
+        bool isWhitelisted
     );
 
+    error IncorrectFeeSupplied(uint256);
+
     modifier onlyBridge() {
         _onlyBridge();
         _;
@@ -55,6 +60,17 @@ contract FeeHandlerRouter is IFeeHandler, AccessControl {
         _domainResourceIDToFeeHandlerAddress[destinationDomainID][resourceID] = handlerAddress;
     }
 
+    /**
+        @notice Sets or revokes fee whitelist from an address.
+        @param whitelistAddress Address to be whitelisted.
+        @param isWhitelisted Set to true to exempt an address from paying fees.
+     */
+    function adminSetWhitelist(address whitelistAddress, bool isWhitelisted) external onlyAdmin {
+        _whitelist[whitelistAddress] = isWhitelisted;
+
+        emit WhitelistChanged(whitelistAddress, isWhitelisted);
+    }
+
 
     /**
         @notice Initiates collecting fee with corresponding fee handler contract using IFeeHandler interface.
@@ -66,6 +82,11 @@ contract FeeHandlerRouter is IFeeHandler, AccessControl {
         @param feeData Additional data to be passed to the fee handler.
      */
     function collectFee(address sender, uint8 fromDomainID, uint8 destinationDomainID, bytes32 resourceID, bytes calldata depositData, bytes calldata feeData) payable external onlyBridge {
+        if (_whitelist[sender]) {
+            if (msg.value != 0) revert IncorrectFeeSupplied(msg.value);
+            return;
+        }
+
         IFeeHandler feeHandler = _domainResourceIDToFeeHandlerAddress[destinationDomainID][resourceID];
         feeHandler.collectFee{value: msg.value}(sender, fromDomainID, destinationDomainID, resourceID, depositData, feeData);
     }
@@ -82,6 +103,10 @@ contract FeeHandlerRouter is IFeeHandler, AccessControl {
         @return tokenAddress Returns the address of the token to be used for fee.
      */
     function calculateFee(address sender, uint8 fromDomainID, uint8 destinationDomainID, bytes32 resourceID, bytes calldata depositData, bytes calldata feeData) external view returns(uint256 fee, address tokenAddress) {
+        if (_whitelist[sender]) {
+            return (0, address(0));
+        }
+
         IFeeHandler feeHandler = _domainResourceIDToFeeHandlerAddress[destinationDomainID][resourceID];
         return feeHandler.calculateFee(sender, fromDomainID, destinationDomainID, resourceID, depositData, feeData);
     }
diff --git a/test/feeRouter/feeRouter.js b/test/feeRouter/feeRouter.js
deleted file mode 100644
index e69de29b..00000000
diff --git a/test/handlers/fee/handlerRouter.js b/test/handlers/fee/handlerRouter.js
index 8c26a410..0b8f0f45 100644
--- a/test/handlers/fee/handlerRouter.js
+++ b/test/handlers/fee/handlerRouter.js
@@ -1,18 +1,25 @@
 // The Licensed Work is (c) 2022 Sygma
 // SPDX-License-Identifier: LGPL-3.0-only
 
+const Ethers = require("ethers");
+
 const TruffleAssert = require("truffle-assertions");
 
 const Helpers = require("../../helpers");
 
-const DynamicFeeHandlerContract = artifacts.require("DynamicERC20FeeHandlerEVM");
+const BasicFeeHandlerContract = artifacts.require("BasicFeeHandler");
 const FeeHandlerRouterContract = artifacts.require("FeeHandlerRouter");
 const ERC20MintableContract = artifacts.require("ERC20PresetMinterPauser");
 
 contract("FeeHandlerRouter", async (accounts) => {
   const originDomainID = 1;
   const destinationDomainID = 2;
+  const feeData = "0x0";
   const nonAdmin = accounts[1];
+  const whitelistAddress = accounts[2];
+  const nonWhitelistAddress = accounts[3];
+  const recipientAddress = accounts[3];
+  const bridgeAddress = accounts[4];
 
   const assertOnlyAdmin = (method, ...params) => {
     return TruffleAssert.reverts(
@@ -21,27 +28,23 @@ contract("FeeHandlerRouter", async (accounts) => {
     );
   };
 
-  let BridgeInstance;
   let FeeHandlerRouterInstance;
+  let BasicFeeHandlerInstance;
   let ERC20MintableInstance;
   let resourceID;
 
   beforeEach(async () => {
     await Promise.all([
-      (BridgeInstance = await Helpers.deployBridge(
-        destinationDomainID,
-        accounts[0]
-      )),
       ERC20MintableContract.new("token", "TOK").then(
         (instance) => (ERC20MintableInstance = instance)
       ),
     ]);
 
     FeeHandlerRouterInstance = await FeeHandlerRouterContract.new(
-      BridgeInstance.address
+      bridgeAddress
     );
-    DynamicFeeHandlerInstance = await DynamicFeeHandlerContract.new(
-      BridgeInstance.address,
+    BasicFeeHandlerInstance = await BasicFeeHandlerContract.new(
+      bridgeAddress,
       FeeHandlerRouterInstance.address
     );
 
@@ -82,4 +85,144 @@ contract("FeeHandlerRouter", async (accounts) => {
       feeHandlerAddress
     );
   });
+
+  it("should successfully set whitelist on an address", async () => {
+    assert.equal(
+      await FeeHandlerRouterInstance._whitelist.call(
+        whitelistAddress
+      ),
+      false
+    );
+
+    const whitelistTx = await FeeHandlerRouterInstance.adminSetWhitelist(
+      whitelistAddress,
+      true
+    );
+    assert.equal(
+      await FeeHandlerRouterInstance._whitelist.call(
+        whitelistAddress
+      ),
+      true
+    );
+    TruffleAssert.eventEmitted(whitelistTx, "WhitelistChanged", (event) => {
+      return (
+        event.whitelistAddress === whitelistAddress &&
+        event.isWhitelisted === true
+      );
+    });
+  });
+
+  it("should require admin role to set whitelist address", async () => {
+    await assertOnlyAdmin(
+      FeeHandlerRouterInstance.adminSetWhitelist,
+      whitelistAddress,
+      true
+    );
+  });
+
+  it("should return fee 0 if address whitelisted", async () => {
+    await FeeHandlerRouterInstance.adminSetWhitelist(
+      whitelistAddress,
+      true
+    );
+    await FeeHandlerRouterInstance.adminSetResourceHandler(
+      destinationDomainID,
+      resourceID,
+      BasicFeeHandlerInstance.address
+    );
+    await BasicFeeHandlerInstance.changeFee(Ethers.utils.parseEther("0.5"));
+
+    const depositData = Helpers.createERCDepositData(100, 20, recipientAddress);
+    let res = await FeeHandlerRouterInstance.calculateFee.call(
+      whitelistAddress,
+      originDomainID,
+      destinationDomainID,
+      resourceID,
+      depositData,
+      feeData
+    );
+    assert.equal(web3.utils.fromWei(res[0], "ether"), "0")
+    res = await FeeHandlerRouterInstance.calculateFee.call(
+      nonWhitelistAddress,
+      originDomainID,
+      destinationDomainID,
+      resourceID,
+      depositData,
+      feeData
+    );
+    assert.equal(web3.utils.fromWei(res[0], "ether"), "0.5")
+  });
+
+  it("should revert if whitelisted address provides fee", async () => {
+    await FeeHandlerRouterInstance.adminSetWhitelist(
+      whitelistAddress,
+      true
+    );
+    await FeeHandlerRouterInstance.adminSetResourceHandler(
+      destinationDomainID,
+      resourceID,
+      BasicFeeHandlerInstance.address
+    );
+    await BasicFeeHandlerInstance.changeFee(Ethers.utils.parseEther("0.5"));
+
+    const depositData = Helpers.createERCDepositData(100, 20, recipientAddress);
+    await Helpers.expectToRevertWithCustomError(
+      FeeHandlerRouterInstance.collectFee(
+        whitelistAddress,
+        originDomainID,
+        destinationDomainID,
+        resourceID,
+        depositData,
+        feeData, 
+        {
+          from: bridgeAddress,
+          value: Ethers.utils.parseEther("0.5").toString()
+        }
+      ),
+      "IncorrectFeeSupplied(uint256)"
+    );
+    await TruffleAssert.passes(
+      FeeHandlerRouterInstance.collectFee(
+        nonWhitelistAddress,
+        originDomainID,
+        destinationDomainID,
+        resourceID,
+        depositData,
+        feeData, 
+        {
+          from: bridgeAddress,
+          value: Ethers.utils.parseEther("0.5").toString()
+        }
+      ),
+    );
+  });
+
+  it("should not collect fee from whitelisted address", async () => {
+    await FeeHandlerRouterInstance.adminSetWhitelist(
+      whitelistAddress,
+      true
+    );
+    await FeeHandlerRouterInstance.adminSetResourceHandler(
+      destinationDomainID,
+      resourceID,
+      BasicFeeHandlerInstance.address
+    );
+    await BasicFeeHandlerInstance.changeFee(Ethers.utils.parseEther("0.5"));
+
+    const depositData = Helpers.createERCDepositData(100, 20, recipientAddress);
+    await TruffleAssert.passes(
+      FeeHandlerRouterInstance.collectFee(
+        whitelistAddress,
+        originDomainID,
+        destinationDomainID,
+        resourceID,
+        depositData,
+        feeData, 
+        {
+          from: bridgeAddress,
+          value: "0" 
+        }
+      ),
+    );
+  });
 });