Rs. Shops and businesses with turnover of Rs 50 crore and above must provide digital payment option

Mumbai, December 31, 2019, Tuesday

Shops, business firms or companies with a turnover of Rs 1 crore or more will be required to provide digital payment facility to their customers from 1st February. On a daily basis, huge fines will be charged from shops or companies that fail to provide this facility, sources in the Central Board of Direct Taxes (CBDT) said.

The decision has been taken as part of the government's goal of making the country a lace-cash economy. If payment is not accepted within the specified digital modes, a fine of up to Rs 1 will be charged.

A circular issued by the CBDT states that those who will install and operate the system by January 1, will not be charged penalties under Section 4DB of the Finance Act.

In order to make the country less cash economy, a new provision has been added to the Income Tax Act which has made it mandatory to provide digital payments facility. The Merchant Discount Rate will not be charged for these digital transactions. This rate is the amount of money a bank has to pay for a merchant transaction.

In the Budget introduced on July 7, Finance Minister Nirmala Sitaram announced some mod-op payments as cheap modes of digital modes of payment, wherein merchant discount rate charges would not apply.

The Finance Minister announced on Saturday that merchants with annual turnover of more than Rs 1 crore were exempted from merchant discount rate charges.

It is worth mentioning here that since the blockade introduced in 1, there has been an increasing emphasis by the government on increasing digital payments facilities in the country. Consumers are also being encouraged to make digital payments against purchases. However, the prevalence of digital transactions in the country has not increased as expected.