This story has been especially released, keeping in mind the highest concern for public interest.
Since digital payments have been burgeoning like forest fire all throughout the nation, we think its of the utmost importance that you all must be updated with the latest news from the Central Board of Direct Taxes (CBDT).
As per CBDT, banks will not levy any tax on digital transactions, w.e.f on or after January 1, 2020.
Also, any bank that has charged additional taxes on such payments made through electronic modes, are advised to refund such customers.
Let’s learn more about this.
What is this All About?
We have already informed you of how the government is working tirelessly towards promoting digital payment methods.
In fact, digital modes of payments like UPI have also attracted unprecedented users, especially in the times of the coronavirus pandemic.
Now, in another such mode to encourage digital payment methods, the CBDT has announced that:
Under Section 10A of the Payment and Settlement Systems Act 2007, no bank shall levy any tax charge on transactions made through electronic modes, along with the Merchant Discount Rate (MDR) on or after January 1, 2020, as prescribed under section 269SU of IT Act.
What Falls under ‘Electronic Modes of Payment’ ?
In order for you to understand more upon what this decision is about, you must understand whether or not this applies to you.
So, electronic modes of transactions include:
- Debit Card by Rupay
- Unified Payment Interface, UPI
- UPI Quick Response code, UPI QR Code
- Bharat Interface for Money (BHIM) UPI QR Code
Banks to Refund Any Such Cases
The regulator has stated that any bank coming under the radar of charging taxes for such electronic transactions henceforth, shall fall under the 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”, added the circular issued by the CBDT.
“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 and not to impose charges on any future transactions carried through the said prescribed mode”.