Clarification on refund of charges imposed by banks on the prescribed e-modes under section 269SU

  • For encouraging a move towards a digital and cashless economy Sec 269SU had been inserted into the Income Tax Act through the Finance Act, 2019.
  • The section made it mandatory for businesses having turnover over Rs. 50 crores in previous year to offer e-payment facilities through prescribed modes. The electronic modes prescribed are as follows:
  1. Debit Card powered by RuPay;
  2. Unified Payments Interface (UPI) (BHIM-UPI); and
  3. Unified Payments Interface Quick Response Code (UPI QR code) (BHIM-UPI QR code).
  • The Government has also correspondingly inserted Sec 10A in Payment and Settlement Scheme (PSS) Act, 2017 which provides that no Bank or system provider could impose charges on payments made or received through prescribed modes as mentioned above.
  • As per Circular No 16/2020 issued by CBDT on 30th August, 2020, banks imposing any such charges on transactions on the above payment modes are in breach of law and any charges collected on the same after 1st January, 2020 is to be refunded.
  • The circular further clarifies that breach of provisions of section 10A of PSS Act as well as section 271DB of the IT Act attracts penal provisions under section 26 of PSS Act and 271DB of the IT act, respectively.