From February 1, businesses will be fined Rs 5,000 per day if they fail to accept payments through digital payment facilities, the Central Board of Direct Taxes (CBDT) said in a circular dated December 30. This will be applicable to companies with an annual turnover of over Rs 50 crore.

The move is to encourage digital transactions and a ‘less-cash’ economy.

A new section (Section 269SU) has been inserted in the Income Tax Act, 1961 as a part of the Finance Act, 2019, which makes it mandatory for every person having a business turnover of more than Rs 50 crore to provide facilities for accepting payments through prescribed electronic modes, with effect from January 1.

As per the Section lOA of the Payment and Settlement Systems Act 2007, inserted by the Finance Act, no bank or system provider is allowed to impose any charge on a payer making payment, or a beneficiary receiving payment, through prescribed electronic modes. No charge including the Merchant Discount Rate (MDR) will be applicable on or after January 1 on payment made through prescribed electronic modes.

The said businesses are required to install and operationalise facilities for digital payment on or before January 31. "However, if the specified person fails to do so, he shall be liable to pay a penalty of Rs 5,000 per day from February 1 under section 271DB of the Act for such failure," the circular said. #casansaar (Source - PTI, MoneyControl, Income Tax Circular)