CBDT Tells Banks To Refund Customers For UPI, Digital Payment Charges After Jan 1

New Delhi: The Central Board of Direct Taxes (CBDT) has asked banks to return the money they had charged customers by way of UPI payments or online transactions.

“… Based on Section 10A of the Payment and Settlement Systems Act 2007, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 1st January, 2020 on payment made through prescribed electronic modes,” CBDT said in a circular.

The electronics modes of transactions include 1) Debit card powered by RuPay, 2) Unified Payment Interface (UPI) and 3) Unified Payment Interface Quick Response code (UPI QR code), BHIM UPI QR code.

“According to Section 10 A under the Payments and Settlement Systems Act 2007, no bank or system provider shall impose any charge on a payer making payment or beneficiary receiving payment, through electronic modes prescribed under section 269SU of IT Act,” the CBDT said, as quoted by Live Mint.

Certain banks were collecting charges for UPI transactions. However, a certain number of transactions are free and beyond the limit.

“Such practice on parts of banks is a breach of Section 10A of the PSS Act as well as section 269SU of the IT act,” the CBDT said in its circular. Hence, the banks can not levy any extra charges for UPI transactions.

“Such breach attracts penal provisions under section 271DB of the IT Act as well as section 26 of the PSS Act,” CBDT stated further.

The banks have been asked to refund charges collected from customers for e-transactions on or after January 1, 2020. “Banks are, therefore, advised 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 and not to impose charges on any future transactions carried through the said prescribed mode,” the circular said.

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