Does making payments through IMPS or NEFT make any difference?

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Updated: December 23, 2016 5:25:24 PM

A week of celebrations has begun with the Christmas Eve. However, while going cashless for your purchase, understand the extra charges behind the medium of payment you are using to transfer the funds.

IMPS VS. NEFT, IMPS and NEFT Difference, service tax, timing, 24x7, internet, mobile banking, net banking, 4G, 3G, smartphones, nepal, Christmas eve, exchange gifts, payment, fund transfer, cashless When it’s time to exchange gifts, NEFT and IMPS become a highly-secure medium for transfer of funds. The funds can easily be transferred from your mobile phone and internet banking.

A week of celebrations has begun with the Christmas Eve. However, while going cashless for your purchase, understand the extra charges behind the medium of payment you are using to transfer the funds.

When it’s time to exchange gifts, NEFT and IMPS become a highly-secure medium for transfer of funds. The funds can easily be transferred from your mobile phone and internet banking.

What is IMPS?

IMPS, which stands for immediate payment service (IMPS), helps in transferring fund from one individual to another. It works on real time basis. This instant service is available throughout the day and night even on holidays. However, at times, due to heavy traffic or some technical issue, you may not receive the fund on instant basis. But then, no need to panic because as soon as you transfer the fund you get the valuation date of transfer which you can check on your net banking by checking the status of your fund under IMPS category.

When to use: When you need to transfer money on an instant basis where time becomes a major constraint, then use IMPS. Moreover, if your transaction amount is between Rs.10000 and Rs 2 lakh, then IMPS is preferable because the service provided to you is on an instant basis with the same service tax as applicable for NEFT.

What is NEFT?

NEFT stands for national electronic fund transfer. Transfer of funds runs into batches mainly with an hour’s gap. Under this mechanism, any individual, firm can transfer fund from any bank to individual or firm. It takes a time to transfer funds to the recipients.

NEFT also provides one-way cross-border transfer of funds from India to Nepal, which is known as Indo-Nepal Remittance Facility Scheme. You can do NEFT up to Rs.50000 from your bank to any of the banks in Nepal and the concerned person will receive money in Nepalese rupees

When to use: If it’s not urgent and the amount is less than Rs.10000, one should ideally use NEFT for fund transfer from one individual to another because the service tax applicable to such transactions is much lower than IMPS.

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IMPS VS. NEFT

The amount transferred: Under IMPS you can transfer a maximum amount of up to Rs.2 lakh whereas under NEFT you can transfer a maximum amount of up to Rs10 lakh.

Service Tax: Minimum tax charges under IMPS is Rs.5+service taxes per transaction while under NEFT, the minimum charges are Rs.2.5+service tax (on transaction up to Rs.10000). However, if you are transferring money above 5 lakh, then minimum service charges of Rs.25+service taxes will be levied.

Timings: Under IMPS you can transfer funds 24×7 even on Sundays and holidays while under NEFT, you can transfer funds from 8 AM to 7 PM on weekdays and on Saturday from 8 AM to 1:00 PM.

No. of Settlements: Settlement under IMPS is done on that particular day itself with the final cut over time of 23:00hours. While under NEFT maximum of 12 settlements can be done on weekdays. However, on Saturday they are compressed to 6 settlements only

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