Section 269SU Mandatory Requirement to Provide Digital Payment Facility by Certain Class of Persons

Notification No. 105/2019-Income Tax dated 30th December 2019

We are moving towards Cashless economy and government has done a lot to remove black money  circulation from our system. Cashless economy is the need of modern and progressive India. This is age of digitization and modern technologies. We have sophisticated and modern computers and mobile phones with and by using simple security features we can use our modern devices as bank in our hands.

In order to move a step further towards digital economy the Government  of India introduces Section 269SU to the Income Tax Act, 1961 through Finance Act, 2019.

 SECTION 269SU:

Effectively applicable from: 1st day of February, 2020

Eligible tax payers: Every person, carrying on business 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. (Section – 269SU of Income Tax Act 1961)

Penalty for non-compliance: Rs. 5000 (Rupees Five Thousand), for every day during which such failure continues (Section – 271DB)

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

Penalty will start from 01/02/2020.

 Prescribed Electronic modes: (Rule 119AA via. Notification No. 105/2019-Income Tax dated 30th December 2019) a eligible taxpayer can use;

  • Transfer funds into your own linked accounts of the same bank network.
  • Transfer funds into different account of the same bank.
  • Transfer funds into different bank’s accounts using NEFT.
  • Transfer funds into other bank accounts using RTGS
  • Transfer funds into various accounts using IMPS.

 Types of electronic funds transfer?

  • NEFT or National Electronics Funds Transfer
  • RTGS or Real Time Gross Settlement
  • IMPS or Immediate Payment Service.

 In addition to the facility for other electronic modes of payment following modes are prescribed:

(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)

 Instructions to the Bank;

Section 10A of the Payment and Settlement Systems Act, 2007 which was inserted by the Finance Act provides that no bank or system provider shall impose and charge on a payer, or a beneficiary receiving payment, through electronic mode prescribed under Section 269SU of the Act.

Conclusion:  the steps taken by Government of India has been welcomed by industry players. Every specified person should provide digital payment facility till 31/01/2020 to avoid payment of penalty of Rs. 5000/- per day.  

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One Comment

  1. Mukesh says:

    The additional three payment modes should be applicable only for B2C payments. The implementation by the Government is without application of mind. Which business use Rupay debit card or BHIM UPI etc. for B2B payments.

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