New Delhi, December 31: The Central Board of Direct Taxes (CBDT) on Tuesday issued a circular asking all the companies with turnover of Rs 50 crores or more to provide facility of payment through RuPay Debit Card and Unified Payments Interface (UPI) QR code to their customers from February 1, 2020. The circular had been issued as per the set guidelines by Union Ministry of Finance, which had made it mandatory, failing which the businesses would be penalised Rs 5,000 a day.

Issuing the order, the circular by CBDT states that firms or companies have a deadline until January 31, 2020, to install the digital payment system. The circular says, "All companies with turnover of Rs 50 crores or more mandated by Department of Revenue, Ministry of Finance to provide facility of payment through RuPay Debit Card and UPI QR code to their customers." Adding more, it said, "Government has notified RuPay & Unified Payments Interface (UPI) as prescribed mode of payments for undertaking digital transactions without Merchant Discount Rates (MDR)." Zero MDR on RuPay and UPI Will Kill Digital Payments Industry of India, Says PCI.

Here's the ANI tweet:

According to the circular, the latest initiative is aimed improving government's stride towards a cash-less economy and penalty would not be applicable to 'the specified person' -- firms or businesses -- who installs and operationalises the facilities on or before January 31, 2020.

Elaborating more about the new circular -- released on December 30 -- CBDT said that the circular is according to the guidelines of Section 271DB of the Finance Act. It said, "However, if the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees per day from February 1, 2020 under section 271DB of the Act for such failure." GST Rates Revised: Hotel Stays Become Cheaper, Caffeinated Drinks Get Costlier; Here's The Complete List of New Tax Rates Announced by Nirmala Sitharaman After GST Council Meet in Goa.

Earlier, a new provision was inserted in the Income Tax Act to encourage digital economy under which every person having a business turnover of more than Rs 50 crore has been mandated to provide facilities for accepting payments through prescribed electronic modes. It is to be known that UPI and RuPay hare the most favourite mode of payment for digital transactions without any Merchant Discount Rate (MDR).

However, CBDT had also stated that no bank or system provider can impose or charge a payer if payments are made digitally, and also MDR would not be applicable on or after January 1, 2020, if the payments are made through prescribed electronic modes, reports CNBC TV18. MDR or Merchant Discount Rate is the percentage of the digital transaction that a merchant pays to banks and this cost is often passed on to the customer. Year-Ender 2019 on Indian Economy: 5 Key Decisions Taken by Nirmala Sitharaman to Fix The Plunging Economy This Year.

Maenwhile, the Payments Council of India (PCI) Chairman Vishwas Patel on Monday said the initiative by Union Finance Minister Nirmala Sitharaman to make MDR free for digital transactions made using RuPay credit cards or UPI QR codes would kill the industry and make the business model unviable. He had said, "Payment service providers play a vital role in growing digital payments. The prohibition on charge of MDR on RuPay and UPI would kill the industry and make the business model unviable. It's like nationalization of the payments industry."

(The above story first appeared on LatestLY on Dec 31, 2019 01:23 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).