CBDT vide Notification 105/2019 and Circular 32/2019 dated 30.12.2019 has prescribed 3 Electronic Modes for accepting payment by person having total sales, turnover, total gross receipts of more than Rs. 50 Crore as mentioned in Section 269SU which governs ‘Acceptance of payment through prescribed modes’.

Provision applicable from 1st January, 2020 (Rule 119AA) prescribes the following e-payment modes:

a) Debit Card powered by Rupay

b) Unified Payments Interface (UPI) – BHIM-UPI

c) UPI QR Code

Penalty for non-compliance – Rs. 5,000/day

No penalty under Section 271DB, if the person installs and operationalizes the facilities on or before 31st January, 2020.

So, the businesses, firms, shops get a final 1 month time to go digital and save themselves from shelling out hefty fines!!

Circular No. 32/2019

Government of India
Ministry of Finance
Department of Revenue
Tax Policy Division
Central Board Of Direct Taxes
New Delhi

********

Dated: December 30, 2019

Sub.: Clarifications in respect of prescribed electronic modes under section 269SU of the Income-tax Act, 1961 – reg.

In furtherance to the declared policy objective of the Government to encourage digital economy and move towards a less-cash economy, a new provision namely Section 269SU was inserted in the Income-tax Act, 1961 (“the Act”), vide the Finance (No. 2) Act 2019 (“the Finance Act”), which provides that every person having a business turnover of more than Rs. 50 Crore (“specified person”) shall mandatorily provide facilities for accepting payments through prescribed electronic modes. The said electronic modes have been prescribed vide notification no. 105/2019 dated 30.12.2019 (“prescribed electronic modes”). Therefore, with effect from 01st January, 2020, the specified person must provide the facilities for accepting payment through the prescribed electronic modes. Further. Section 10A of the Payment and Settlement Systems Act 2007, inserted by the Finance Act, provides that no Bank or system provider shall impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under Section 269SU of the Act. Consequently, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01st January, 2020 on payment made through prescribed electronic modes.

2. In this connection, it may be noted that the Finance Act has also inserted section 271DB in the Act, which provides for levy of penalty of five thousand rupees per day in case of failure by the specified person to comply with the provisions of section 269SU. In order to allow sufficient time to the specified person to install and operationalise the facility for accepting payment through the prescribed electronic modes, it is hereby clarified that the penalty under section 271DB of the Act shall not be levied if the specified person installs and operationalises the facilities on or before 31st January, 2020. However, if the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees per day from 01st February, 2020 under section 271DB of the Act for such failure.

[F.No.370142/35/2019-TPL]

(Ankur Goyal)
Under Secretary to the Govt. of India

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38 Comments

  1. ankit3210 says:

    CBDT has issued Circular no. 16/2020 on 30th August, 2020 advising banks to immediately refund the charges collected, if any, on or after 1st January, 2020 on transactions carried out using the electronic modes prescribed under section 269SU of the Income-tax Act,1961

    Banks are also advised not to impose any charges on any future transactions carried through these prescribed modes.

  2. ankit3210 says:

    Circular 12/2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

    1. ankit3210 says:

      A functionality has been enabled in the e-filing login of the taxpayers whose business turnover exceeds Rs.50 crores to provide the prescribed mode of electronic acceptance of payment made available to the customers.

  3. NIKHIL JAIN says:

    we are an exporter. we have all our shipments done and the payments are recd. by our banker directly to our bank against the payment done by our customer from the overseas countries. so it is already online payment through bank. Do we also require to the QR code to affixed on our commercial invoices issued in US dollars.

    1. ankit3210 says:

      As rightly mentioned by you Nikhil Sir, this above compliance will result in nothing more than additional compliance cost for you. However, at present there are no exceptions being mentioned by the Govt and so those who cross the above turnover limit, these businesses should provide all 3 facilities for accepting payment as per Notification in respect of rule 119AA.

    2. ankit3210 says:

      Circular 12/2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

    1. ankit3210 says:

      Circular 12/2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

  4. Chetan Purohit says:

    Is it necessary to provide all three facilities?

    POS machine is mandatory for manufacturing units as well? Yes we fall under he bracket of turnover more than Rs. 50 Crores.

    We have already complied with QR Code and UPI, is it necessary for POS machine?

    1. ankit3210 says:

      As per Notification under rule 119AA, all 3 facilities for accepting payment should be provided. Additionally, for your information, today a functionality has been enabled in the e-filing login of the taxpayers whose business turnover exceeds Rs.50 crores to provide the prescribed mode of electronic acceptance of payment made available to the customers. So kindly check your Efiling login as well.

    2. Venkatrama Maheshwara Rao says:

      Rupay enabled debit card mode of payment not just includes POS but you may also consider having the on web provision of accepting debit card mode of payment where in the service provider is Rupay.

    3. ankit3210 says:

      Circular 12/2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

  5. ashish kumar says:

    is it prohibit to get cash payment below 10K in due course of business. please advise as we have petrol pump where all transaction in digital mode is not possible…

    1. ankit3210 says:

      To my opinion Sir, there is no prohibition on acceptance of Cash within 10000. The provision states that every business should mandatorily provide the facilities of prescribed modes of payment if it’s turnover is above Rs 50 Crore. So, as per the wordings, you need to provide these modes of payments to your customers and vendors.
      However, there exists multiple practical hinderances as mentioned by you which Government should clarify further.

  6. ranjeet kumar says:

    Whether this section 269SU is applicable on NBFC finance company which accept all payment through RTGS,NEFT,IMPS only. there is only large amount transaction i think upi does’t support large transaction. Please reply

    1. ankit3210 says:

      Rightly mentioned by you Sir. There are various practical questions being raised on this provision and also its constitutional validity as well. Surely, Govt would be required to bring some sort of clarification in respect of the term “business”.
      As per the current scenario, this provision is applicable to every person which includes NBFC as well as being a Company it falls under the definition of “Person” under Income-tax Act, 1961.

    2. ankit3210 says:

      Circular 12/2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

  7. Abhishek Paunikar says:

    Hi, please confirm these act is applicable for Business to Business collection or for Consumer/End User/ Customer to Company collection

    1. ankit3210 says:

      Abhishek Sir, this provision is applicable to every person carrying on business and having total sales/ turnover/ gross receipts in excess of Rs 50 Crores in the preceding previous year.

      Thus, whether it be a B2B or B2C Transaction, if the total sales/ turnover/ gross receipts is in excess of Rs 50 Crores in the preceding previous year, the business entity need to comply with the above said provisions and provide facility of the prescribed modes of payment.

    2. ankit3210 says:

      Circular 12/2020 dated 20.05.2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

    1. ankit3210 says:

      Sumit Sir, this provision is applicable to every person carrying on business and having total sales/ turnover/ gross receipts in excess of Rs 50 Crores in the preceding previous year.

      Thus, if the total sales/ turnover/ gross receipts of the export business is in excess of Rs 50 Crores in the preceding previous year, the business entity need to comply with the above said provisions and provide facility of the prescribed modes of payment.

    2. ankit3210 says:

      Circular 12/2020 dated 20.05.2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

    1. ankit3210 says:

      Manish Sir, this provision is applicable to every person carrying on business and having total sales/ turnover/ gross receipts in excess of Rs 50 Crores in the preceding previous year.

      Thus, whether it be a B2B or B2C Transaction, if the total sales/ turnover/ gross receipts is in excess of Rs 50 Crores in the preceding previous year, the business entity need to comply with the above said provisions and provide facility of the prescribed modes of payment.

    2. ankit3210 says:

      Circular 12/2020 dated 20.05.2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

    1. ankit3210 says:

      Specified person’ includes every person carrying on business and having total sales/ turnover/ gross receipts in excess of Rs 50 Crores in the preceding previous year. Interestingly, this provision is applicable only for persons carrying out any ‘business’ and persons carrying out ‘profession’ are not covered thereunder.

        1. ankit3210 says:

          As mentioned in my above comment, every person carrying on business and having total sales/ turnover/ gross receipts in excess of Rs 50 Crores in the preceding previous year.

          As defined in Section 2(31) of the Income-tax Act, 1961, the term “Person” includes :

          1. an Individual;
          2. a Hindu Undivided Family (HUF) ;
          3. a Company;
          4. a Firm
          5. an association of persons or a body of individuals, whether incorporated or not;
          6.a local authority; and
          7. every artificial juridical person not falling within any of the preceding sub-clauses.

          Thus, this provision is applicable to a Company carrying on business and having total sales/ turnover/ gross receipts in excess of Rs 50 Crores in the preceding previous year.

        2. ankit3210 says:

          Circular 12/2020 dated 20.05.2020 grants relief from this compliance if “specified person” has only B2B transactions and atleast 95% sales are non-cash

    2. V. MEENAKSHI says:

      Dear Sir,

      Thanks for your mail sir.

      A Society registered under the Societies Registration Act – a charitable trust – registered under Section 12 A of the income tax act and charitable trust runs educational institutions – various stream exceeds Rs.50 crores receipt. Will the Society will come under this section?

      Please clarify

      1. ankit3210 says:

        In response to your query, I wish to let you know Madam that this provision is applicable to every person carrying on business and having total sales/ turnover/ gross receipts in excess of Rs 50 Crores in the preceding previous year.

        As defined in Section 2(31) of the Income-tax Act, 1961, the term “Person” includes :

        1. an Individual;
        2. a Hindu Undivided Family (HUF) ;
        3. a Company;
        4. a Firm
        5. an association of persons or a body of individuals(AOP/BOI), whether incorporated or not;
        6.a local authority; and
        7. every artificial juridical person not falling within any of the preceding sub-clauses.

        Thus, this provision to my opinion is applicable to a Society as well having total sales/ turnover/ gross receipts in excess of Rs 50 Crores in the preceding previous year as it falls in the category of AOP/BOI.

      2. CA Anupam Saxena says:

        It is applicable on any person “CARRYING ON BUSINESS”, therefore, if AOP/BOI is engaged in charitable activity (education included), and is not carrying any business, the provisions are not applicable.

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