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Your business must accept digital payment or pay this much penalty per day

The move is aimed towards achieving the government’s goal of a cashless economy.

In the latest move to push India towards digital economy, the Central Board of Direct Taxes has said that shops, businesses and companies with at least Rs 50 crore annual turnover will be penalised Rs 5,000 per day if they do not provide digital payment facilities to customers. Businesses which do not start to accept digital payment by 1 February, 2020 will be penalised, CBDT said in a circular on Monday, IANS reported. Relaxation till 31 January 2020 has been given to provide time for installation and operationalising digital modes. “If the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees per day from 1st February, 2020 under section 271DB of the Act for such failure,” the CBDT circular said.

The move is aimed towards achieving the government’s goal of a cashless economy.  A new provision was also inserted in the Income Tax Act which makes it mandatory for businesses with turnover of more than Rs 50 crore to provide facilities for accepting payments through prescribed electronic modes, i.e, RuPay and UPI. The government had also waived off Merchant Discount Rate (MDR) charges on the transactions done via UPI and RuPay modes to boost online payments. Merchants were to earlier pass a percentage of the digital transaction to banks. This cost was mostly borne by the customers. The MDR charge is then passed onto three stakeholders — the banks for enabling the transaction, the vendor for installation of PoS machine and the card network provider such as Visa.

The announcement of MDR charge waive off comes months after the finance minister Nirmala Sitharaman’s maiden budget speech when she had said that businesses with an annual turnover of Rs 50 crore or more must offer affordable digital modes of payment to customers. She had also listed out BHIM UPI, UPI-QR Code, Aadhaar Pay, and certain Debit cards, among others, as low-cost digital modes of payment upon which the government can waive off the MDR charges.

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Source: Financial Express