In furtherance to the declared policy objective of the Government of India to encourage digital economy and move towards a less-cash economy, a new provision namely Section 269SU has been inserted in the Income-tax Act, 1961 vide the Finance (No. 2) Act 2019, which provides that every person having a business turnover of more than Rs 50 Crore shall mandatorily provide facilities for accepting payments through prescribed electronic modes which has been notified vide Notification Number 105/2019 Dated 30/12/2019 :-

(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).

Therefore, with effect from 01st January, 2020, the specified person must provide the facilities for accepting payment through the prescribed electronic modes.

BANK OR SYSTEM PROVIDER SHALL NOT IMPOSE ANY CHARGE ON A PAYER OR A PAYEE :- 

Section 10A of the Payment and Settlement Systems Act, 2007 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 above. 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.

“Merchant discount rate is the rate charged to a merchant for payment processing services on debit and credit card transactions”

Please note every company on which this provision applies shall provide all the prescribed mode for accepting the payment to comply this provision.

PENAL PROVISON FOR NON COMPLAICE:-

In this connection, it may be noted that the Finance Act has also inserted section 27IDB 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 above provision.

RELAXTION FROM PENALTY TILL 31.01.2020 :-

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 operationalise 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.

Further, please note that Income tax department has now come with a compliance that we have to submit a response through the compliance section of Income Tax Portal that “whether the assessee has facility to accept payments through the mode prescribed”. Step to make compliance is as below:-

New Functionality in your Income Tax Profile > Under Compliance > namely “Prescribed Payment Modes”.

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7 Comments

  1. 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. 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 ?

    1. 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

  3. RAMESH KUMAR AHUJA says:

    Good Article. However, there is a query in this regard as under:-
    Under Compliance, two options are available, “Yes”, “No”. In case, some one opts for “No’ then expected date is to be mentioned. In such a case, whether penalty will be levied wef 01/02/2020?

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