Payment in 2020: The government has decided to not levy Merchant Discount Rate (MDR) on either customers or merchants from tomorrow (January 1, 2020). However, this facility will be applicable only for payments made through prescribed electronic modes, which includes BHIM-UPI, UPI QR Codes and Rupay Debit Card. Also, businesses with a turnover of over Rs 50 crore may end up paying Rs 5000/day in fine if they fail to install these prescribed modes by January 31.
Vide Circular No. 321201 dated December 30 2019, the Central Board of Direct Taxes (CBDT) said that a new provision namely Section 269SU was inserted in the Income-tax Act, 1961, vide the Finance (No. 2) Act 2019, which provides that every person having a business turnover of more than Rs 50 Crore shall mandatorily provide facilities for accepting payments through prescribed electronic modes. The prescribed electronic modes specified in vide notification no. 105/2019 dated 30.12.2019 include 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).
From January 1, persons having business turnover over Rs 50 crore will have to provide the facilities for accepting payment through the “prescribed electronic modes.”
According to Section 1OA of the Payment and Settlement Systems Act 2007, no Bank or system provider can impose any charge on a person making payment, or a beneficiary receiving payment, through electronic modes prescribed under Section 269SU of the Act. Also, any charge including the MDR (Merchant Discount Rate) will not be applicable on or after January 1, 2020 on payment made through the “prescribed electronic modes.”
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The CBDT said that Finance Act inserted section 271 DB in the Income Tax Act, which provides for levy of penalty of Rs 5000 per day in case of failure by the specified persons to comply with the provisions of section 269SU. The penalty will not be charged if businesses having turnover over Rs 50 crore install the “prescribed electronic modes” by January 31, 2020. If they fail to do so, a penalty of Rs 5000 per day from February 1 will be levied on such businesses.
“In order to allow sufficient time to the specified person to install and operationalise the facility for accepting payment through the prescribed electronic modes, it is hereby clarified that the penalty under section 271 DB of the Act shall not be levied if the specified person installs and operationalises the facilities on or before 31st January, 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 01 February, 2020 under section 271 DB of the Act for such failure,” CBDT said.
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Source: Financial Express