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Private Bank Withdraw Charges On UPI Transactions After CBDT Row

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After the direct tax authority of the country CBDT asked banks to refund charges levied on UPI and Rupay transactions from January 1 this year, banks from the private space have withdrawn such charges on UPI transactions. "Such charges violate the law. The lenders are asked to stop all such impositions or face penal actions. Any cap on free UPI transactions is a breach of the PSS (payment and settlement systems) and IT Act," CBDT had said on Sunday.

Private Bank Withdraw Charges On UPI Transactions After CBDT Row
 

This is after some of the private lenders introduced charges between Rs. 2.5-5 on aforesaid mentioned digital transactions beyond 20 transactions a month for person to person payments. Banks including Kotak Mahindra, HDFC Bank, ICICI Bank and Axis Bank were all charing for these transactions. Notably public sector SBI did not charge for UPI transaction which are prescribed by the centre so as to promote digital economy and cashless transactions.

"Banks are... advised to immediately refund the charges collected, if any, on or after 1 January 2020, on transactions carried out using the electronic modes... and not to impose charges on any future transactions carried through the said prescribed modes," said the Central Board of Direct Taxes circular.

"There have been some representations that some banks are imposing and collecting charges on transactions carried out through UPI... Such a practice on part of the banks is a breach of Section 10A of Payments and Settlements Systems Act... Such breach attracts penal provisions under Section 271 DS of the IT Act as well as Section 26 of the PSS Act," the direct tax body said.

The call on charges being levied for UPI transaction was taken with a view to prevent misuse of UPI as users began carrying out small ticket size transactions via the platform.

GoodReturns.in

Read more about: upi cbdt
Story first published: Friday, September 4, 2020, 12:28 [IST]
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