The Central Board of Direct Taxes (CBDT) informed that all companies or business entities with a business volume of ₹ 50 crore or more annually must provide facilities and accept payments through digital transactions. The regulation was introduced through Section 269SU of the Income Tax Act, a new section with effect from January 1st, 2020. Section 269SU shall be part of the Finance Act 2019. Non-compliance of this regulation shall lead to a fine of ₹ 5,000 per day. The fine will be effective from 1st February 2020 and would be initiated through the rules as informed in Section 271DB. The regulation was introduced through the circular no-32/2019 on 30th December 2019.

Digital Paymant

Prescribed Electronic Modes of Payment under Section 269SU

Every person with a business turnover of more than 50 crore during the immediately preceding previous year have to mandatorily provide all the following modes for the purpose of acceptance of payment, which is in addition to the facility for other electronic modes of payment, if any, being provided by such person:

  • Debit Card powered by RuPay
  • Unified Payments Interface (UPI) (BHIM-UPI)
  • Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

Instructions to the Bank related to electronic mode prescribed under Section 269SU

Section 10A of the Payment and Settlement Systems Act, 2007 which was inserted by the Finance Act provides that no bank or system provider shall impose and charge including Merchant Discount Rate (MDR) on a payer, or a beneficiary receiving payment, through electronic mode prescribed under Section 269SU of the Act.

Key Points of Section 269SU

 

Key Points

Summary – 269SU

Applicability of Section 269SU

√ Applies to every person

√ carrying on business and

√ turnover of the business exceeds ₹ 50 crore during the immediately preceding previous year

Effective Date of Enforcement Provisions of Section 269SU

√ This section came in to effect from 01-01-2020 and to equip yourself time has given up to 31-01-2020.

Implication & Modes of Payment Under Section 269SU

Such business has to provide facility for accepting payment through following electronic modes, in addition to the facility for other electronic modes of payments.

Such modes of payments are notified vide notification no. 105/2019 of CBDT dated 30th Dec-2019 are as follows:

√ Debit Card powered by RuPay

√ Unified Payments Interface (UPI) (BHIM-UPI)

√ Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

Consequence Of Non Compliance Of Section 269SU

Penalty of 5,000/- per day and will be effective from 01-02-2020 under section 271DB for failure to comply with provisions of section 269SU.

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32 Comments

  1. Chetan Shah says:

    One of my client is in trading business of Coal and having TO exceed 50Crore. He receives all payments through RTGS/NEFT. and most of the payment is more then 50lacs or 1 crore. is it require them to take QR code. no one will use QR code for this big payments. kindly advice.

  2. Pankaj says:

    Dear Sir
    I am equity stock trader (derivative segment) and my turnover is less than 50 cr and audited as under section 44AB. I received intimation from IT dept to provide for accepting payments thro electronic modes u/s 269SU. My CA is not clear if I need to provide these facilities. I have activated UPI & UPI QR code for my Bank account. Please confirm if I am covered us 269 SU and if yes how to get mode tp receive payment through Debit card powered Rupay.
    I would appreciate your help on this issue.
    Regards
    Pankaj

    1. CA Piyush Agarwal says:

      Dear Pankaj,
      Section 269SU is not applicable for u because of your business turnover less than is prescribed,
      I don’t know what is the basis that IT dept issue notice for compliance’s of Section 269SU.
      Payment through Rupay Debit card is basically, u need POS Machine for ur business.

  3. lency says:

    Is it necessary to Add BHIM upi or BHIM upi QR code on the Invoice. or the Printing of Bank Details like (Account No. and IFSC code) will Comply the Provisions?

  4. Rupin Merchant says:

    Partnership firm into share trading, f & o and online commoditii trading is also require to give such facility, where they do all these activities in their name and all payments allowed through RTGS OR NEFT, and no customer kind of situation. So, 269SU is applicable to firm also ?

  5. T V SUBBA RAO says:

    What is meant by “Debit Card powered by RuPay” —
    If i have a Debit Card and is haveing account particulars of the company, i can pay. Then what is that need to provided by the Company with Turnover of more than 50 crores

  6. Abhinandan says:

    Whether installation of Third party UPI App like SBI BHIM would tantamount to compliance to above reqmt. OR we have to install direct BHIM App and register as a merchant..?

    1. CA Piyush Agarwal says:

      Dear Prabhat,
      Section 269SU applicable for provide facilities and accept payments through digital transactions.and u can see section 269SS.

  7. Prity says:

    Sir,
    Companies turnover exceeds Rs 50 Cr but all the payments are bring received through cheque . So in this case whether sec 296SU is applicable.

    1. CA Piyush Agarwal says:

      Dear Prity,
      Section 269SU apply for provide facility to customers for payment through prescribed electronic modes. If ur customers pay through cheque this doesn’t matter.
      So u need to install this facility for customers

  8. Ankit Chothani says:

    Is it applicable on Banks, if yes than what is it’s impact on a bank ( Holding Office outside India & Sub. working in India) and customers.

  9. RAVI PARKASH says:

    Dear Sir

    I am working in a service providing company,turnover exceeding 50 cr. we received payment by mode of cheque from many of our clients .
    section 269su is applicable on our company????,please clarify.

    Regards

    Ravi Parkash

    1. CA Piyush Agarwal says:

      Dear Ravi Parkash,
      The list of “prescribed mode” is yet not finalized and is under preparation by the CBDT

      The primary objective of the provision is to encourage the digital economy and move towards a less-cash economy. After the introduction of the provision, a business entity is duty-bound and under a legal obligation to provide the electronic mode of payments facility to its customers.

      It is expected to include E Modes like BHIM UPI, UPI-QR Code, Payment Gateways of banks / Financial Institutions / Payment Settlement Systems etc. The payment can be accepted by the seller in cash (subject to limit of Rs. 2 Lakh u/s 269ST) or by way of cheque or bank draft or ECG / RTGS without any undertaking.

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