The Central Board of Direct Taxes vide its notification dated 30th August 2020 has directed banks to refund the charges collected on or after January 1, 2020, on transactions carried out through electronic modes and not to impose charges on any future transactions carried through electronic mode.
The Income Tax Act requires a person carrying on business and having sales/turnover/gross receipts from business of more than Rs 50 crore in the immediately preceding previous year to mandatorily provide facilities for accepting payments through prescribed electronic modes, therefore the government inserted a new provision, Section 269SU, in the Finance Act, 2019 to promote digital payments in India and to reduce the cash transactions.
The prescribed electronics modes under section 269SU includes, Debit card powered by RuPay, Unified Payment Interface (UPI) and Unified Payment Interface Quick Response code (UPI QR code), BHIM UPI QR code.
However, CBDT has received representations that some banks are imposing and collecting charges on transactions carried out through UPI. A certain number of transactions are allowed free of charge beyond which every transaction bears a charge, therefore through this notification, every bank has been advised to immediately refund the charges collected if any on or before 1st January 2020 on transactions carried out using the prescribed electronic modes.Image download link: