Question : Promotion of Digital Transactions

(a) whether the Government proposes to provide any incentive to promote digital transactions and if so, the details thereof;
(b) whether the extra rate of interest being charged by the banks on digital transactions is causing adverse effect on it and if so, the details thereof;
(c) whether the Central Board for Direct Taxes has issued circular regarding imposing heavy fine of Rs.5000 per day on the shops or companies having revenue of 50 crore or more for not making available at least one digital payment mode and if so, the details thereof; and
(d) whether the Government proposes to review the rate of interest being charged by the banks on digital transactions and if so, the details thereof?

MINISTER OF STATE (FINANCE)
(SHRI ANURAG SINGH THAKUR)

(a): A Statement indicating steps taken by the Government to incentivise digital payments is at Annexure.

(b) to (d): Section 269SU has been inserted in the Income Tax Act, 1961 vide the Finance Act, 2019 to provide that every person carrying out business, whose total sales, turnover, or gross receipts, as the case may be exceeds fifty crore rupees during the immediately preceding year, shall provide facility for accepting payments through electronic modes prescribed vide Notification No.105/2019 dated 30.12.2019 of CBDT. The Finance (No.2) Act, 2019 has also inserted section 271DB in the Act which provides for a levy of penalty of five thousand rupees per day in case of failure by a specified person to comply with the provisions of section 269SU. However, the penalty will be levied w.e.f. 1st February 2020 if the specified person fails to install and operationalize the facilities on or before 31.01.2020.

Further, Section 10A of the Payment and Settlement Systems Act, 2007, inserted vide the Finance Act, 2019 provides that no bank or system provider shall impose and charge on a payer, or a beneficiary receiving payment, through electronic mode prescribed under Section 269SU of the Act. Consequently, any charge including the Merchant Discount Rate (MDR) shall not be applicable on or after January 1, 2020 on payment made through prescribed electronic modes.

On December 06, 2017, the Reserve Bank of India (RBI) had issued a circular on “Rationalization of Merchant Discount Rate (MDR) for Debit Card Transactions”, whereby the maximum permissible MDR for both ‘card present’ and ‘card not present’ transactions have been prescribed. Further, banks have also been advised therein to ensure that MDR charges for debit card transactions are not passed on to the customers by the merchants on-boarded by them. RBI vide circular dated June 11,2019 waived processing charges and time varying charges levied on Banks for outward transactions undertaken using RTGS/NEFT w.e.f. 01.07.2019 and advised banks to pass the benefit to their customers.
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