In a move to encourage digital payments in the country, the Central Board of Direct Taxes (CBDT) said that banks cannot charge any additional fees for transactions made through electronic modes as of January 1, 2020. ” .. according to section 10A of the Payment and Settlement Systems Act of 2007, any charge that includes the MDR (Merchant Discount Rate) will not be applicable as of January 1, 2020 in the payment made through the prescribed electronic modes, “CBDT said in a statement.
Electronic modes of transactions include 1) RuPay Powered Debit Card, 2) Unified Payment Interface (UPI), 3) Unified Payment Interface Quick Response Code (UPI QR Code), UPI BHIM QR Code. “In accordance with Section 10 A of the Payment and Settlement Systems Act of 2007, no bank or system provider will impose any charge on a payer who makes the payment or the beneficiary who receives the payment, through electronic means prescribed in section 269SU of the TI Act, “said the CBDT.
The regulator noted that certain banks charge fees for UPI transactions. Certain number of transactions are free and exceed the limit, the bank charges for each UPI payment. “Such practice in parts of banks is a violation of Section 10A of the PSS Act, as well as section 269SU of the TI Act,” the CBDT said in its circular. Therefore, banks cannot charge additional fees for UPI transactions.
“Such non-compliance attracts criminal provisions under section 271DB of the TI Act, as well as section 26 of the PSS Act,” CBDT added.
Banks were also recommended to reimburse charges charged to customers for digital transactions as of January 1, 2020. “Therefore, banks are encouraged to immediately reimburse charges charged, if any, as of January 1, 2020. January 1, 2020 in transactions carried out with the electronic modes prescribed in section 269SU and not to impose charges on future transactions carried out through said prescribed mode, “the regulator mentioned in its circular.
UPI-based payments recorded 1.49 billion transactions in July, according to data released by National Payments Corp. of India. Digital payments have become a necessity after the coronavirus outbreak. “Payment systems have proven to be reliable and durable, and they continue to generate a high level of trust among the general population,” PwC said in its report.
“With most sectors contributing to digital payments still in a state of flux, it is still too early to determine the long-term impact of COVID-19 on digital payments,” he added.
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