The Centre has announced hefty fines if shops, business firms or companies with an annual turnover of Rs 50 cr or more do not use digital payment.
The step has been taken by the Narendra Modi government for promoting digital transactions.
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According to media reports, these shopkeepers or traders have been given time till January 31 to install digital payment systems in their establishments.
The shopkeepers or traders will have to pay a fine of Rs 5,000 per day from February 1, 2020, for not providing the digital payment facility to their customers.
A circular issued on December 30 to this effect said: “if the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees per day from 1st February 2020 under section 271DB of the Act for such failure”.
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The Central Board of Direct Taxes (CBDT) clarified that the move aimed at giving sufficient time to the specified person to install and operationalise the facility for accepting payment through prescribed electronic modes.
The CBDT circular further said: “Consequently, any charge including the MDR shall not be applicable on or after January 1, 2020, on payment made through prescribed electronic modes.”
RuPay and UPI are among the prescribed mode of payment for digital transactions without any Merchant Discount Rate (MDR).
Union finance minister Nirmala Sitharaman in her Budget speech in July had listed out BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards among others as the low-cost digital modes of payment.
This is a move to promote a less-cash economy.