In order to boost Digital payment in economy, Government take various move from Demonetization to Amending provision of Income Tax and GST. Along with Banking regulator move to drive NEFT transaction 24*7.

Recently Finance minister Nirmala Sitharaman ji announced the exemption of Merchant Discount Rate(MDR) charges on the transactions done via UPI and RuPay modes. This is yet another move by the government to take the Indian economy towards a less-cash economy. The announcement was made post the meeting between the Finance Minister and head of public sector banks in New Delhi.

Also in order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulation of black money and to promote digital economy, it is inserted a new section 269SU in the Act through Finance Bill 2019 along with Rule 119 AA under Income Tax Act.

Let understand meaning of terms as specified:-

“UPI”UPI or Unified Payments Interface is an immediate real-time payment system that helps in instantly transferring the funds between the two bank accounts through a mobile platform.Hence, UPI is a concept that allows multiple bank accounts to get into a single mobile application. This idea was developed by the National Payments Corporation of India and is controlled by the RBI and IBA (Indian Bank Association).

“BHIM” Bharat Interface for Money allows users to make payments using the UPI(Unified Payments Interface) application. The BHIM app can be used by anyone who has a mobile number, debit card and a valid bank account. Money can be transferred to different bank accounts.

“RuPay” RuPay is India’s indigenous card scheme created by the National Payments Corporation of India.It was conceived to fulfill RBI’s vision to offer a domestic, open-loop, multilateral system which will allow all Indian banks and financial institutions in India to participate in electronic payments.It is made in India, for every Indian to take them towards a “less cash” society.

Provision inserted under “INCOME TAX”

Government inserted various provision via Finance (No.2) Bill, 2019 under Income Tax to  promote payment through UPI and RuPay as specified in brief below:

269SU Acceptance of payment through prescribed electronic modes:

Every person, carrying on business, shall provide facility for accepting payment through prescribed electronic modes, in addition to the facility for other electronic modes, of payment, if any, being provided by such person, if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year.

Rule 119 AA:-Modes of payment for the purpose of section 269SU

Every person, carrying on business, if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year shall provide facility for accepting payment through following electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person, namely:—

(i) Debit Card powered by RuPay;

(ii) Unified Payments Interface (UPI) (BHIM-UPI); and

(iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code).”.

Sec 13 A: – Special provision relating to incomes of political parties

Any income of a political party which is chargeable under the head “Income from house property” or “Income from other sources” or “Capital gains” or any income by way of voluntary contributions received by a political party from any person shall not be included in the total income of the previous year of such political party

Provided that—no donation exceeding two thousand rupees is received by such political party otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed] or through electoral bond.

Sec 35 AD: – Deduction in respect of expenditure on specified business

An assessee shall be allowed a deduction in respect of the whole of any expenditure of capital nature incurred, wholly and exclusively, for the purposes of any specified business carried on by him during the previous year in which such expenditure is incurred by him.

Sub section 8(f) any expenditure of capital nature shall not include any expenditure in respect of which the payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account  [or through such other electronic mode as may be prescribed], exceeds ten thousand rupees or any expenditure incurred on the acquisition of any land or goodwill or financial instrument.

Sec 40 A: – Expenses or payments not deductible in certain circumstances

Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], exceeds ten thousand rupees, no deduction shall be allowed in respect of such expenditure.

Sec 43:- Expenditure on Acquisition of Capital Goods

It specified that where the assessee incurs any expenditure for acquisition of any asset or part thereof in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account  [or through such other electronic mode as may be prescribed], exceeds ten thousand rupees, such expenditure shall be ignored for the purposes of determination of actual cost.

Sec 43 A: – Special provision for full value of consideration for transfer of assets other than capital assets in certain cases

Adoption of fair value of Asset for sale of Assets, other than Capital Asset, being land or building or both.

Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same. The value may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement.

This will be apply only where the amount of consideration or a part thereof has been received  [by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account[or through such other electronic mode as may be prescribed] on or before the date of agreement for transfer of the asset.

Sec 44AD :- Special provision for computing profits and gains of business on presumptive basis

Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession.

Provided that for the words “eight per cent”, the words “six per cent” had been substituted, in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account  [or through such other electronic mode as may be prescribed] during the previous year or before the due date specified in sub-section (1) of section 139 in respect of that previous year.

Sec 50 C:-  Special provision for full value of consideration in certain cases

Adoption of Fair value for transfer of capital assets for consideration less than its Stamp duty value. Where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer.

Provided further in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account  [or through such other electronic mode as may be prescribed], on or before the date of the agreement for transfer:

Sec 80JJAA :- Deduction in respect of employment of new employees

Where the gross total income of an assessee to whom section 44AB applies, includes any profits and gains derived from business, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional employee cost incurred in the course of such business in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.

Provided that in the case of an existing business, the additional employee cost shall be nil, if—

(a) there is no increase in the number of employees from the total number of employees employed as on the last day of the preceding year;

(b) emoluments are paid otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account  [or through such other electronic mode as may be prescribed].

Sec 269 SS:- REQUIREMENT AS TO MODE OF ACCEPTANCE, PAYMENT OR REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX

No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account  [or through such other electronic mode as may be prescribed]

Sec 269ST:- Mode of undertaking transactions

No person shall receive an amount of two lakh rupees or more—

(a) in aggregate from a person in a day; or

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed].

Provision under “GST”

In its 29th meeting in August month, the Council approved the proposal to introduce the following scheme for incentivising digital payment under GST regime:

1. The GST concessions on digital payments be given on the B2C transactions made through RuPay (Debit Card) and UPI-Unified Payment Interface, BHIM, USSD and BHIM-Aadhaar;

2. The GST concession shall be given by way of refund to the consumer in his account through an automated route;

3. The concession shall be 20% of total GST paid subject to the total ceiling of Rs.100 (Rs.50 CGST and Rs. 50 SGST) per transaction;

4. The CGST amount given as cashback shall be pooled in by the Centre and SGST amount shall be pooled in by the respective State;

5. Upon approval of the proposal, the exact modalities for providing the concession to be put in place in consultation with the nodal Ministry (Ministry of Electronics & Information Technology);

6. There shall be an SMS facility to inform the purchaser regarding the digital transaction made through RuPay (Debit card) and BHIM UPI and to inform the amount that would be credited to the purchaser’s account as cashback;

7. This scheme shall be run on a pilot basis in the States of Assam, Tamil Nadu and in any other State that may volunteer for the same.

Author can be reached at manishkalwani1996@gmail.com

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