NEW DELHI: On Sunday, the income tax department attacked banks that electronic transactions or payments through tools like UPI, warning them of criminal action for breaking the law.
Last year, the government had introduced a new provision that required all companies with an annual turnover of Rs 50 million or more to offer customers the option of making payment through prescribed modes of payment. The list includes systems like BHIM UPI, UPI-QR Code, Aadhaar Pay, certain debit cards, NEFT and RTGS.
On August 25, TOI reported that almost all large private banks had introduced charges, ranging from Rs 2.50 to Rs 5, on person-to-person payments made through Unified payment interface (UPI) more than 20 times a month.
In a circular issued on Sunday, the Central Board of Direct Taxes (CBDT) said it had received statements that some banks are imposing and charging fees on transactions made using UPI. She pointed to a previous circular specifying that a commercial discount rate (MDR) will not be applied to transactions carried out through the prescribed modes.
Noting that the charges are a violation of its circular issued last December, CBDT instructed the banks to refund the charges and not charge any fees in the future. She warned banks that failure to comply with the guidelines will lead to criminal actions under the Income Tax Law and the Payment and Settlement Systems Law.
The rule was established to make the system transparent, as companies often refuse to accept payments by checks or electronic means and insist on payment in cash, which they do not disclose and generate black money throughout the system.
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