{"id":27649,"date":"2020-01-04T07:00:36","date_gmt":"2020-01-04T01:30:36","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=27649"},"modified":"2020-08-24T18:19:06","modified_gmt":"2020-08-24T12:49:06","slug":"not-accepting-digital-payments-may-lead-to-penalty-of-rs-5000","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/not-accepting-digital-payments-may-lead-to-penalty-of-rs-5000\/","title":{"rendered":"CBDT to fine hefty fine penalty of Rs. 5000\/day from February 1 for not accepting Digital Payments"},"content":{"rendered":"<p class=\"has-drop-cap\">Finance Minister <em><strong>Nirmala Sitharaman <\/strong>in July Budget propounded, <\/em>that the business establishments with annual turnover more than 50 crores shall offer such low-cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants. <a href=\"https:\/\/www.rbi.org.in\/\"><strong>RBI<\/strong><\/a> and Banks will absorb these costs from the savings that will <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;ACCRUE&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Accrue, in financial terms, refers to the gradual accumulation of financial obligations or benefits over time. It typically involves the recognition of expenses or revenue as they are earned or(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/accrue\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>accrue<\/a> to them on account of handling less cash as people move to these digital modes of payment.<\/p>\n\n\n\n<div class=\"shadow1\"><strong>In Circular No. 32\/2019<\/strong> issued by <strong>Central Board of Direct Taxes (CBDT) dated 30 December 2019 mentioned that Section 269SU is inserted in the Income Tax Act, 1961, see the Finance (No.2) Act 2019, read with section 295 of the Income-tax Act, 1961 (43 of 1961)<\/strong> provides that every person having a business turnover of more than Rs. 50 crore shall &lsquo;mandatorily&rsquo; provide facilities for accepting payments through prescribed electronic modes.<\/div>\n\n\n\n<p>The prescribed mode of\npayments for the purpose of 269 SU has been inserted in 119A.<\/p>\n\n\n\n<p><strong><em>Following electronic mode of payment has been recommended:<\/em><\/strong><strong><em><\/em><\/strong><\/p>\n\n\n\n<ul><li>Debit Card powered by RuPay<\/li><li>Unified Payments Interface (UPI) (BHIM-UPI); and<\/li><li>Unified Payments Interface Quick Response Code (UPI QR Code)\n(BHIM-UPI QR Code).&rdquo;<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"632\" height=\"242\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/electronic-mode-of-payment.png\" alt=\"electronic mode of payment\" class=\"wp-image-27651\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/electronic-mode-of-payment.png 632w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/electronic-mode-of-payment-300x115.png 300w\" sizes=\"(max-width: 632px) 100vw, 632px\"\/><figcaption> <br><strong><em>electronic mode of payment<\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n<p>Businesses or firms will be free to use\nany other electronic mode of payments apart from these. As per the Government\nagencies no Merchant Discount Rate (MDR) will be charged for electronic mode of\npayment. <\/p>\n\n\n\n<ul><li>From January 1, persons having business turnover over Rs 50\ncrore will have to provide the facilities for accepting payment through the\n&ldquo;prescribed electronic modes.&rdquo;<\/li><li>No Bank\nor System Provider can impose any charge on a person making payment, or a\nbeneficiary receiving payment, through electronic modes prescribed under\nSection 269SU of the Act.<\/li><li>Any\ncharge including the Merchant Discount Rate) will not be applicable on or after\nJanuary 1, 2020, on payment made through modes specified in 119A.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty Provisions<\/h2>\n\n\n\n<p>&ldquo;In order to allow sufficient time to the specified person to install and operationalize 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 operationalizes 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,&rdquo; CBDT said.<\/p>\n\n\n\n<p>The Central\nBoard of Direct Taxes said that the Finance Act inserted\nsection 271 DB in the Income Tax Act, which provides for levy of penalty of Rs\n5000 per day in case of failure by the specified persons to comply with the\nprovisions of section 269SU. The penalty will not be charged if businesses\nhaving turnover over Rs 50 crore install the &ldquo;prescribed electronic modes&rdquo; by\nJanuary 31, 2020. If they fail to do so, a penalty of Rs 5000 per day from\nFebruary 1 will be levied on such businesses.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/new-rbi-notification-rtgs-time-extended\/\" target=\"_blank\" rel=\"noopener noreferrer\">New RBI Notification: RTGS Time Extended<\/a><\/mark>.<\/p><\/div>\n\n\n\n<p>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 &ldquo;prescribed electronic modes.&rdquo;<\/p>\n\n\n\n<p>During a meeting between Finance Minister Nirmala Sitharaman and the Chiefs of Public Sector Banks last week, the issue of deducting MDR and the final date of its implementation was decided. Non- Bank Service providers are shocked by this decision. According to them, this decision will affect their further investment prospects.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Points:<\/h2>\n\n\n\n<ul><li>No Merchant Discount Rate on either Customers or Business persons from January 1, 2020.<\/li><li>The above facility will be applicable only for Electronic Payment Modes like BHIM-UPI, UPI QR Codes, and Rupay Debit Card.<\/li><li>The Time limit to install this prescribed mode is January 31, 2020.<\/li><li>If any firm or business fails to follow this policy they will have to pay Rs.5000\/day as fine.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>This\nmove is a step towards the Government&rsquo;s Digital Payment Initiative. By cutting\ndown Merchant Discount Rates (MDR) the business both the business persons and\nthe customers are getting encouraged to use the Digital Payment method. The Government\nhas also given time of one month to install the payment methods failing which\nfirms\/businesses will have to pay Rs.5000\/day.<\/p>\n\n\n<a href=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/circular_32_2019.pdf\" class=\"pdfemb-viewer\" style=\"width: 767px; \" data-width=\"767\" data-height=\"max\" data-toolbar=\"bottom\" data-toolbar-fixed=\"on\">circular_32_2019<br><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Finance Minister Nirmala Sitharaman in July Budget propounded, that the business establishments with annual turnover more than 50 crores shall offer such low-cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants. RBI and Banks will absorb these costs from the [&hellip;]<\/p>\n","protected":false},"author":27,"featured_media":27653,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2620],"tags":[3297],"acf":{"service_id":"215"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Not accepting Digital Payments may lead to penalty of Rs.5000 - Enterslice<\/title>\n<meta name=\"description\" content=\"CBDT to fine hefty fine penalty of Rs. 5000\/day from February 1 for not accepting Digital Payments. 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