Businesses to Pay Rs 5000 Fine/Day for not Offering Digital Payment Facilities
With effect from February 1, businesses will be fined Rs 5,000 per day if they fail to accept payments through digital payment facilities, the Central Board of Direct Taxes (CBDT) said in a circular dated December 30. This will be applicable to companies with an annual turnover of over Rs 50 crore.
The move is to encourage digital transactions and a ‘less-cash’ economy.
In the notification dated December 30 has listed debit card powered by RuPay, Unified Payments Interface (UPI) (BHIM-UPI) and Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code) as prescribed modes of payment for undertaking digital transactions without any MDR. Businesses will be free to use any other electronic mode of payments apart from those prescribed, but for these, there will not be mandatory requirement to waiver MDR.
(MDR refers to the cost paid by merchant to a bank for accepting payment through electronic means such as credit card, debit card etc.)
A new section (Section 269SU) has been inserted in the Income Tax Act, 1961 as a part of the Finance Act, 2019, which makes it mandatory for every person having a business turnover of more than Rs 50 crore to provide facilities for accepting payments through prescribed electronic modes, with effect from January 1.
The said businesses are required to install and operationalise facilities for digital payment on or before January 31. “However, if the specified person fails to do so, he shall be liable to pay a penalty of Rs 5,000 per day from February 1 under section 271DB of the Act for such failure,” the circular said.