Private lenders waive fees on UPI-based transactions

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Private banks waived fees on Unified Payment Interface (UPI) -based transactions after the Central Commission on Direct Taxes (CBDT) asked banks to reimburse fees collected from customers and merchants for transactions UPI from January.

“Such accusations violate the law. Lenders are urged to stop all such charges or face criminal actions. Any cap on free UPI transactions is a violation of the PSS (payment and settlement systems) and IT law, ”CBDT said on Sunday.

He had also asked banks not to charge customers for other electronic payments powered by RuPay and payments based on QR codes using UPI QR and BHIM UPI QR.

The move comes after a few private banks started charging 2.5-5 for UPI-based person-to-person payments in excess of 20 transactions per month. ICICI Bank and HDFC Bank started collecting fees from May 3, while Axis Bank and Kotak Mahindra Bank introduced it from June 1 and April 1, respectively.

Public sector banks, including the SBI, did not charge any fees on UPI transactions.

“Banks are… invited to immediately reimburse the fees levied, if applicable, from January 1, 2020, on transactions made using electronic modes… and not to impose fees on future transactions made via said prescribed modes », Declared the Circular of the Central Council of Direct Taxes.

“There have been statements that some banks charge and collect fees on transactions made through UPI… Such practice by banks constitutes a violation of Section 10A of the Payment and Settlement Systems Act. … Such violation results in penal provisions under Article 271 DS of the IT law as well as Article 26 of the PSS law, “said the direct tax body.

Banks had started charging for UPI-based transactions in order to prevent misuse of UPI after customers started small note transactions on the system. When UPI first came into being, many fintech players had authorized remittances through rewards and other perks.

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