New Delhi: Businesses with more than ₹50 crore sales will have to compulsorily offer electronic payment modes such as debit cards powered by RuPay from 1 January 2020 and a penalty for defaults will kick in from 1 February, finance ministry has said.
The ministry said in a notification signed on Monday that the specified payment modes to be compulsorily adopted are in addition to the electronic payment modes already provided by firms. The suggested payment modes are debit cards powered by RuPay--a payment network offered by National Payments Corp. of India (NPCI), Unified Payments Interface (UPI) and Unified Payments Interface Quick Response Code (UPIQRC). The notification has suggested NPCI’s BHIM UPI and quick response code in the notification.
Although the requirement is in force from Wednesday, one month grace period is allowed before penalty is enforced so that businesses get enough time to put in place the facilities. The fine specified for default is ₹5,000 a day. The requirement is introduced through the Income Tax (16th Amendment) Rules of 2019. The idea is to boost digital transactions and support the payment and settlement system of NPCI, a not-for profit company.
An official statement issued by the finance ministry said banks and payment systems offering payment modes under this section are not allowed to levy any charge on the person making payments or on the recipient.
Digital transactions got a big boost in the country after the 2016 high value currency ban. In October, transactions via the three-year old instant payments system UPI recorded a new high of 1 billion, Mint reported on 8 November. The rapid adoption of electronic payment is aided by a young population having discretionary income, cheaper smartphones and data connectivity. Formalisation of the economy has also contributed to its adoption.