Mandating acceptance of payments through prescribed electronic modes

In order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulation of black money and to promote digital economy, it is proposed to insert a new section 269SU in the Act so as to provide that every person, carrying on business, shall, provide facility for accepting payment through the prescribed electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person, if his total sales, turnover or gross receipts in business exceeds fifty crore rupees during the immediately preceding previous year.

In order to ensure compliance of the aforesaid provisions, it is further proposed to insert a new section 27IDB to provide that the failure to provide facility for electronic modes of payment prescribed under section 269SU shall attract penalty of a sum of five thousand rupees, for every day during which such failure continues. However, the penalty shall not be imposed if the person proves that there were good and sufficient reasons for such failure. Any such penalty shall be imposed by the Joint Commissioner.

This amendment will take effect from 1st November, 2019.

[Clauses 59 & 62]

Further, it is proposed to make a consequential amendment in the Payment and Settlement Systems Act, 2007 so as to provide that no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the modes of electronic payment prescribed under section 269SU of the Income-tax Act.

This amendment will take effect from 1st November, 2019.

[Clause 194]

Extract of Clauses 59, 62 & 194 of Finance Bill 2019

59. Insertion of new section 269SU.

Acceptance of payment through prescribed electronic modes. 

After section 269ST of the Income-tax Act, the following section shall be inserted with effect from the 1st day of November, 2019, namely:—

“269SU. Every person, carrying on business, shall provide facility for accepting payment through prescribed electronic modes, in addition to the facility for other electronic modes, of payment, if any, being provided by such person, if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year.”.

62. Insertion of new section 271DB.

Penalty for failure to comply with provisions of section 269SU.

After section 271DA of the Income-tax Act, the following section shall be inserted with effect from the 1st day of November, 2019, namely:—

“271DB.(1) If a person who is required to provide facility for accepting payment through the prescribed electronic modes of payment referred to in section 269SU, fails to provide such facility, he shall be liable to pay, by way of penalty, a sum of five thousand rupees, for every day during which such failure continues:

Provided that no such penalty shall be imposable if such person proves that there were good and sufficient reasons for such failure.

(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner of Income-tax.”.

194. Amendment of Act 51 of 2007.

In the Payment and Settlement Systems Act, 2007, after section 10, the following section shall be inserted with effect from the 1st day of November, 2019, namely:––

Bank, etc., not to impose charge for using electronic modes of payment.

“10A. Notwithstanding anything contained in this Act, no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961.”.

Note on Clauses 59, 62 & 194 of Finance Bill 2019

Clause 59 of the Bill seeks to insert a new section 269SU of the Income-tax Act relating to acceptance of payment through prescribed electronic modes.

It is proposed to provide that every person, carrying on business, shall provide facility for accepting payment through the prescribed electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person, if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year.

This amendment will take effect from 1st November, 2019.

Clause 62 of the Bill seeks to insert a new section 271DB of the Income-tax Act relating to penalty for failure to comply with provisions of section 269SU.

It is proposed to provide that if a person who is required to provide facility for accepting payment through the prescribed electronic modes of payment referred to in section 269SU, fails to provide such facility, he shall be liable to pay, by way of penalty, a sum of five thousand rupees, for every day during which such failure continues.

It is further proposed that the penalty shall not be imposable if the person proves that there were good and sufficient reasons for such failure.

It is also proposed that any such penalty shall be imposed by the Joint Commissioner.

This amendment will take effect from 1st November, 2019.

Clause 194 of the Bill seeks to amend the Payment and Settlement Systems Act, 2007 by insertion of a new section 10A relating to banks, etc. not to impose charge for using electronic modes of payment.

The proposed new section provides that notwithstanding anything contained in the said Act, no bank or system provider shall impose any charge, upon anyone, either directly or indirectly for using the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961.

This amendment will take effect from 1st November, 2019.

More Under Income Tax

8 Comments

  1. ankur murarka says:

    best example is Bigbazaar , dmart etc where they will go. Please understand the provision that it is all about Compulsory facility to be provided to the Customers i.e. one cannot deny the customer paying online but if customer is paying cash or some other mode they can accept. Dealers need to provide UPI, IMPS, etc facility for online payment .Remember the word “ONLINE FACILITY”

    1. CA Asim Kumar Haldar says:

      As per clarification of Section 269SU of the I.T.Act,cash receipt on Sale should not receipt, as the condition through Electronic mode suggest the e-payment mode is compulsory in his case.

  2. Susheel Tharien says:

    Does this mean that banks will not charge for each transaction using the swiping machine by the vendor?
    They have been charging around 1% of the amount transacted as usage fee /commission and vendors were not allowed to collect it from the customers.

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