Finance Ministry asks banks to refund charges collected on electronic transactions after January 1, 2020
Finance Ministry
The Finance Ministry has asked banks to immediately refund the charges collected after January 1, 2020, on transactions carried out using the electronic mode prescribed under the IT act.
The Finance Ministry has asked banks to immediately refund the charges collected after January 1, 2020, on transactions carried out using the electronic mode prescribed under the IT act.
The Ministry also advised banks not to impose charges on any future transaction carried out through the electronic mode. It said, Central Board of Direct Taxes (CBDT) had issued a notification in this regard on December 30, 2019.
The notification says that if the transactions were carried out through RuPay card, BHIM - UPI, UPI QR Code and BHIM- UPI QR code, no banks or system providers will impose charges. The Ministry said, a new provision has been in the Payment and Settlement System (PSS Act), which provides that no bank or system provider will impose any charge on a payer making a payment or a beneficiary receiving payment through electronic mode.
Income Tax of India in a tweet said, "CBDT has issued Circular no. 16/2020 on 30th August 2020 advising banks to immediately refund the charges collected, if any, on or after 1st January 2020 on transactions carried out using the electronic modes prescribed under section 269SU of the Income-tax Act,1961." It added, "Banks are also advised not to impose any charges on any future transactions carried through these prescribed modes."
CBDT has issued Circular no. 16/2020 on 30th August, 2020 advising banks to immediately refund the charges collected, if any, on or after 1st January, 2020 on transactions carried out using the electronic modes prescribed under section 269SU of the Income-tax Act,1961.(1/2) pic.twitter.com/Dw0D5oVi8T
— Income Tax India (@IncomeTaxIndia) August 30, 2020
In a press release, CBDT said, "This violates the Circular no 32/2019 dated December 30, 2019, which was issued by CBDT to clarify that based on section 10A of (Payment and Settlement System (PSS) Act, any charge including MDR (Merchant Discount Rate) shall not be applicable on or after January 1, 2020, on payments made through electronic modes."
The Ministry said that a representation has been received that some banks are imposing and collecting charges on transactions carried out through UPI. It said that these banks allowed a certain number of transactions to be free, beyond which they levied a charge. It said such practice on part of banks is a breach of the PSS Act and IT Act.
