CBDT asks banks to refund charges on e-transactions made as prescribed u/s 269SU

CBDT asks banks to refund charges collected on or after 01.01.2020 on transactions done using electronic modes prescribed u/s 269SU

F.No.370142/35/2019-TPL-Pt
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

Circular No. 16/2020

Dated: 30th August, 2020

Subject: Imposition of charge on the prescribed electronic modes under section 269SU of the Income-tax Act, 1961 – reg.

In furtherance to the declared policy objective of the Government to encourage digital transactions and move towards a less- cash economy, the Finance (No. 2) Act 2019 inserted a new provision namely section 269SU in the Income-tax Act, 1961 (“the IT Act”), which provides that every person having a business turnover of more than Rs. 50 crores during the immediately preceding previous year shall mandatorily provide facilities for accepting payments through prescribed electronic modes. Further, a new provision namely section 10A was also inserted in the Payment and Settlement Systems Act 2007 (“the PSS Act”), which provides that no Bank or system provider shall impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under section 269SU of their IT Act. Subsequently vide notification no. 105/2019 dated 30.12.2019 (i) Debit Card powered by RuPay: (ii) Unified Payments Interface (UPI) (BHIM-UPI); and (iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code) were notified as prescribed electronic modes under section 269SU of the IT Act.

2. A circular no. 32/2019 dated 30.12.2019 was issued by the Board to clarify that based on section 10A of the PSS Act, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01st January, 2020 on payment made through prescribed electronic modes. However, representations have been received that some banks are imposing and collecting charges on transactions carried out through A certain number of transactions are allowed free of charge beyond which every transaction bears a charge. Such practice on part of banks is a breach of section 10A of the PSS Act as well as section 269SU of the IT Act. Such breach attracts penal provisions under section 271DB of the IT Act as well as section 26 of the PSS Act.

3. 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 of the IT Act and not to impose charges on any future transactions carried through the said prescribed modes.

Ankur Goyal
Under Secretary to the Govt. of India

Download Circular Click Here >>

• Extension of time limit for furnishing GSTR 3B under Delhi GST Act 2017
• Audit Fee to be received only by digital modes/banking channels -ICAI revises Ethics
• Demand set aside as assessee for period covered had discharged tax liability under SVLDRS
• No addition u/s 68 when there is no fresh receipt of unsecured loans during the year
• Taxes on sales comprising in turnover to be excluded for estimating net profit