In a move to encourage digital transaction and less-cash economy, a new section 269SU has been inserted in the Income Tax Act, 1961 as a part of the Finance Act, 2019 and further Central Board of Direct Taxes (CBDT) issued circular 32/2019 and notification 105/2019 dated 30th December, 2019 from The Ministry of Finance, Government of India, which amend the Income Tax Act, 1961. These guidelines together provide clarifications on prescribed electronic modes of payment, and are summarized below for your ready reference.
Effective 1st January 2020, every person having a business turnover greater than INR 50 crores during the preceding previous year is required to provide facilities for accepting payment through each of the below prescribed electronic modes, in addition to the facility for other electronic modes of payment (if any):
i. Debit Card powered by RuPay;
ii. Unified Payments Interface (UPI) (BHIM-UPI);
iii. Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)”.
The circular also provides time till 31st January, 2020 to comply with the aforementioned requirements, failing which, a penalty of INR 5,000/- per day would be levied on the businesses starting 1st February, 2020.
Further, necessary amendments have been made under the Payment and Settlement Systems Act, 2007 to provide that no charge, including Merchant Discount Rates (MDR), shall be levied by banks on payments made through prescribed electronic modes from 1st January 2020 onwards.
The income tax department has also enabled the functionality 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. The process follow is as under:
The following window open after enter the login details:
Update prescribed payment mode details:
As your total sales/turnover/gross receipts from business exceeds Rs. 50 crores, you are required to provide compliance on the prescribed electronics mode of payment provided to customers as per Rule 119AA of the Income Tax Act, 1961. Please click on ‘Continue’ to provide the same.
After click the “continue” the below window is open after selecting ‘Yes’ option:
Please select all options and submit the same.
In case Selecting “No”, please enter the expected date of implementation and submit the same.
The concerned communications from CBDT can be found at the below links:
2. Notification 105/2019: https://taxguru.in/income-tax/rule-119aa-modes-payment-purpose-section-269su.html
In order to comply with this obligation of law, you need to reach out to your Sales/Relationship bank manager for creation of aforesaid facilities on or before 31st January 2020 to avoid any penalty of Rs. 5000/- per day under section 271DB of the Act.
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