Shops, business firms or companies with an annual turnover of Rs 50 crore or more and required to provide digital payment facilities to customers as part of government's stride towards a less-cash economy, will not have to pay any penalty till 31 January for not installing the system.
They would, however, be made to cough up Rs 5,000 per day as penalty for failing to accept payments in the prescribed digital modes from 1 February 2020.
Clarifying this, the Central Board of Direct Taxes (CBDT) said that 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.
In a circular, the CBDT said that penalty under Section 271 DB of the Finance Act shall not be levied if the specified person installs and operationalises the facilities on or before January 31, 2020.
"However, if the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees per day from 1st February, 2020 under section 271 DB of the Act for such failure," the circular dated December 30 said.
In order to encourage digital economy and move towards a less cash economy, a new provision was inserted in the Income Tax Act to require every person having a business turnover of more than Rs 50 crore to mandatorily provide facilities for accepting payments through prescribed electronic modes.
RuPay and UPI are among the prescribed mode of payment for digital transactions without any Merchant Discount Rate (MDR). The MDR is the percentage of the digital transaction that a merchant pays to banks. This cost is most often passed on to the customers.
In her Budget speech in July, Finance Minister Nirmala Sitharaman had listed out BHIM UPI, UPI-QR Code, Aadhaar Pay, 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.
The Minister last Saturday announced that the MDR charges for businesses with over Rs 50 crore annual revenues will be waived off from January 1, 2020.
Section 10A of the Payment and Settlement Systems Act, 2007 which was inserted by the Finance Act provides that no bank or system provider shall impose and charge on a payer, or a beneficiary receiving payment, through electronic mode prescribed under Section 269SU of the Act.
"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.
The story has been published via a syndicated feed, only the headline has been changed
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