Banks to not levy charges on digital transactions, paymentsTop Stories

August 31, 2020 15:57
Banks to not levy charges on digital transactions, payments

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The Union Ministry of Finance has advised the banks in the country to not impose any charges on digital transactions or electronic payments.

The Central Board of Direct Taxes on Sunday said in a statement that the Union Ministry of Finance advised all the banks in the country to not levy any additional charges on digital payments made by the users or any digital transactions done through cards or any other electronic way.

According to CBDT, some representations were made that some of the banks are collecting charges carried out through UPI mode of payment.

These select banks have been charging for every transaction beyond a certain number of transactions which was in violation of the Payment and Settlement System Act according to the Central Board of Direct Taxes.

The press release from the central government agency CBDT noted that this levying of extra charges comes as a violation of the circular no 32/2019 dated December 30, 2019, which was issued by the CBDT to clarify that based on Section 10A of the Payments and Settlements System Act.

The press release also noted that any charge including the Merchant Discount Rate shall not be applicable on or after January 1, 2020, on payments made through electronic modes.

Hence the CBDT said that the ministry has advised the banks to immediately refund the charges collected from users if any after January 2020 on transactions carried out using digital platforms prescribed under section 269SU of the IT act and asked the banks to not impose any such charges on any future transactions carried out through the digital modes.

The electronic modes of transactions include:

1. Debit card powered by Rupay

2. Unified Payment Interface (UPI)

3. Unified Payment Interface Quick Response code (UPI QR)

4. BHIM UPI QR code

The decision from the Union Ministry comes as a move to encourage digital payments in the country. UPI based payments have reached 1.49 billion transactions in July according to the data released by National Payments Corp of India.

Digital payments and transactions saw a peak since March as they have become a necessity during the coronavirus pandemic.

By Gayatri Yellayi

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