To promote cash-less economy, government has come up with a new norm of penalising businesses with a turnover of Rs 50 crore or more if they fails to provide digital payment facilities to customers. In that case, businesses will be penalised with a fine of Rs 5,000 a day. It will be applicable from February 1, 2020.
By January 31st businesses have to install the digital payment system, mentioned in a circular by the Central Board of Direct Taxes (CBDT). The move was aimed at giving sufficient time to "the specified person" to install and operationalise the facility for accepting payment through prescribed electronic modes, said CBDT in the circular.
In a circular, CBDT said penalty under Section 271DB of the Finance Act shall not be levied if the specified person installs and operationalises the facilities on or before January 31, 2020.
The prescribed mode of payments includes RuPay and UPI for digital transactions without any Merchant Discount Rate (MDR). The MDR is the percentage of the digital transaction that a merchant pays to banks and this cost is most often passed on to the customers.
During the budget speech in July, Finance Minister Nirmala Sitharaman listed out BHIM UPI, UPI-QR Code, Aadhaar Pay and certain debit cards among others as the low-cost digital modes of payment which could be offered without levying MDR in order to promote a less-cash economy.
In recent time she announced that MDR charges for businesses with over Rs 50 crore annual revenues will be waived off from January 1, 2020.
"Consequently, any charge including the MDR shall not be applicable on or after January 1, 2020 on payment made through prescribed electronic modes," the CBDT circular said.
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