The Ministry of Finance has advised banks not to collect any charges on transactions or payments made through electronic mode.The development comes after complaints emerged about some banks imposing and collecting charges on UPI transactions. The Central Board of Direct Taxes (CBDT) said in a statement that banks can not levy any extra charge on transactions made through electronic modes on or after January 1, 2020.
“This is in violation of the Circular no 32/2019 dated December 30, 20219, which was issued by CBDT to clarify that based on section 10A of (Payment and Settlement System (PSS) Act, any charge including MDR (Merchant Discount Rate) shall not be applicable on or after January 1, 2020 on payments made through electronic modes,” the release said.
In a move to encourage digital payments in the country, the Ministry has advised the banks to immediately refund the charges collected, if any, on or after January 1, 2020. , on transactions carried out using electronic mode prescribed under section 269SU of the IT Act and not to impose charges on any future transactions carried through electronic mode, the release added.