I-T warns banks of penalty for charging fee on e-payments

  • 8 months ago
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THO
NEW DELHI: The income tax department on Sunday hit out at banks levying fee on electronic transactions or payments via tools such as UPI, warning them of penal action for violating the law.
Last year, the government had inserted a new provision mandating every business with annual turnover of Rs 50 crore or more to provide customers the choice of making payment through prescribed modes of payment. The list includes systems such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain debit cards, NEFT and RTGS.
On August 25, TOI had reported that almost all large private banks had introduced charges, ranging from Rs 2.50 to Rs 5, on person-to-person payments made via Unified Payment Interface (UPI) beyond 20 times a month.
In a circular issued on Sunday, the Central Board of Direct Taxes (CBDT) said it had received representations that some banks are imposing and collecting charges on transactions carried out using UPI. It pointed to an earlier circular where it was specified that no merchant discount rate (MDR) will be levied on transactions made through the prescribed modes.
Pointing out that the charges are a violation of its circular issued last December, CBDT instructed banks to refund the charges and not to levy any fee in future. It warned banks that a breach of the guidelines will attract penal action under the Income Tax Act as well as Payment and Settlement Systems Act.
The rule had been put in place to make the system transparent as businesses often refuse to accept payment by electronic mode or cheque and insist on cash payment, which they do not disclose and generate black money across the system.

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