Don't charge UPI transactions, refund money collected since Jan 1: Finance ministry tells banks
The Finance Ministry has advised all the banks not to collect any charges on transactions or payments made through electronic mode, the Central Board of Direct Taxes (CBDT) said in a statement on Sunday.
According to the CBDT, it received some representations which revealed that a few banks are imposing and collecting charges on transactions carried out through UPI. A certain number of transactions were allowed free by these banks beyond which every transaction bears a charge, the CBDT noted.
"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.
Hence, CBDT said the Ministry of Finance has asked 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.
“Banks are also advised not to impose any charges on any future transactions carried through these prescribed modes,” a tweet by the Income Tax department said quoting the Ministry of Finance.
To be noted, the State Bank of India (SBI) had waived charges on National Electronic Funds Transfer, or NEFT, and Real Time Gross Settlement, or RTGS, from July 1. SBI also decided to do away with the charges on fund transfer through mobile phones using the immediate payment service from August 1.
