Draft Income Tax Rule 133, 134 – Modes of Payment under Section 187 and Option for Patent Royalty Taxation under Section 194(1) (Table: Sr. No. 2)
Rules 133 and 134 of the Draft Income-tax Rules, 2026 introduce compliance measures relating to digital payments and patent royalty taxation. Rule 133 mandates that every person carrying on business or profession with total sales, turnover, or gross receipts exceeding ₹50 crore in the immediately preceding tax year must provide facilities for accepting payments through specified electronic modes. These include Debit Card powered by RuPay, Unified Payments Interface (BHIM-UPI), Unified Payments Interface Quick Response Code (BHIM-UPI QR Code), and Tier-III Full KYC Central Bank Digital Currency wallets, including P-CBDC and Wholesale/Cross-border CBDC, in addition to any other electronic modes already offered. Rule 134 prescribes the procedure for exercising the option for taxation of royalty income from patents developed and registered in India under section 194(1) (Table: Sr. No. 2). Eligible assessees must furnish Form No. 65 on or before the due date specified under section 263(1)(c) for filing the return of income for the relevant tax year to avail of the option.
Extract of Rule No. 133, 134 of Draft Income-tax Rules, 2026
Rule 133
Modes of payment for the purpose of section 187
Every person, carrying on business or profession, if his total sales, turnover or gross receipts, as the case may be, in business or profession exceeds fifty crore rupees during the immediately preceding tax 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).
(iv) Tier-III: Full KYC Central Bank Digital Currency wallets, P-CBDC, Wholesale/Cross-border CBDC.
Rule 134
Exercise of option for taxation of royalty income from patent under section 194(1) (Table: Sr. No. 2) of the Act.
(1) For the purpose of exercising the option for taxation of income as royalty in respect of a patent developed and registered in India, by an eligible assessee under section 194(1)(Table: Sr. No. 2), the eligible assessee shall furnish Form No. 65.
(2) The form referred to in sub-rule (1) shall be furnished on or before the due date specified in section 263(1)(c) for filing the return of income for the relevant tax year, if the option is exercised for that tax year.
