Indian firms, shops get one more month to go digital

NEW DELHI: Shops, business firms or companies with an annual turnover of Rs50 crore or more and required to provide digital payment facilities to customers as part of government’s stride towards a less-cash economy, will not have to pay any penalty till Jan.31 for not installing the system.

They would, however, be made to cough up Rs5,000 per day as penalty for failing to accept payments in the prescribed digital modes from Feb.1, 2020.

Clarifying this, the Central Board of Direct Taxes (CBDT) said that the move was aimed at giving sufficient time to the specified person to install and operationalise the facility for accepting payment through prescribed electronic modes.

In a circular, the CBDT said that penalty under Section 271DB of the Finance Act shall not be levied if the specified person installs and operationalises the facilities on or before Jan.31, 2020. “However, if the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees per day from Feb.1s, 2020 under section 271DB of the Act for such failure,” the circular dated Dec.30 said.

In order to encourage digital economy and move towards a less cash economy, a new provision was inserted in the Income Tax Act to require every person having a business turnover of more than rs 50 crore to mandatorily provide facilities for accepting payments through prescribed electronic modes.

Rupay and UPI are among the prescribed mode of payment for digital transactions without any Merchant Discount Rate (MDR). The MDR is the percentage of the digital transaction that a merchant pays to banks.