Banks not to levy extra charge on transactions made via electronic modes

Banks not to levy extra charge on transactions made via electronic modes In a move to encourage digital payments in the country, the Central Board of Direct Taxes (CBDT) said that banks can not levy any extra charge on transactions made through electronic modes on or after January 1, 2020, based on section 10A of the Payment and Settlement Systems Act 2007, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 1st January 2020 on payment made through prescribed electronic modes," CBDT said in a statement. The electronics modes of transactions include 1) Debit card powered by RuPay, 2) Unified Payment Interface (UPI), 3) Unified Payment Interface Quick Response code (UPI QR code), BHIM UPI QR code. "According to Section 10 A under the Payments and Settlement Systems Act 2007, no bank or system provider shall impose any charge on a payer making payment or beneficiary receiving payment, through electronic modes prescribed under section 269SU of IT Act," the CBDT said. The regulator noticed that certain banks collect charges for UPI transactions. A certain number of transactions are free and beyond the limit, bank charges for every UPI payment. "Such practice on parts of banks is a breach of Section 10A of the PSS Act as well as section 269SU of the IT act," the CBDT said in its circular. Hence, the banks can not levy any extra charges for UPI transactions. Such breach attracts penal provisions.