Finance Ministry asks Banks Not to Levy Charges on Electronic Transactions [READ STATEMENT]

On Sunday (August 30, 2020) an official statement was issued by the Central Board of Direct Taxes (CBDT) stating that the Ministry of Finance has asked banks not to levy any charges on electronic transactions or payments.

According to the CBDT, it received representations that some banks were imposing and collecting charges on transactions carried out through UPI. The board observed that a certain number of transactions were allowed to be free by these banks, however, every subsequent transaction beyond that was charged accordingly.

“This is in violation of the Circular no 32/2019 dated December 30, 2019, 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 press release stated.

Further on, the statement also mentions that the Ministry of Finance has advised the banks to immediately refund charges collected for any electronic transaction from January 1, 2020. “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 quoted the Ministry of Finance.

Earlier, the State Bank of India had announced to waive charges on National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) through any electronic transaction from July 1. Moreover, the bank also decided to remove the immediate payment service (IMPS) charges on mobile banking from August 1.

[READ STATEMENT]