Applicability

Every person carrying on business if his total turnover exceeds Rs 50 Crore in preceding financial year. (Applicable for all companies whether or not listed)

Penal Provision 

If the above provision not fulfilled w.e.f. 01.02.2020 penalty of 5,000/- per day would be levied after 01st Feb 2020.

However if the business fulfilled the criteria of install or operationalizes Digital payment system till 31st January 2020 so the penalty would not be levied. (section 271DB).

Prescribed Electronic Modes(Rule 119AA via Notification No.105/2019 of Income tax )

A eligible taxpayer can use :-

NEFT (National Electronic Fund Transfer)

RTGS (Real Time Gross Transfer)

IMPS (Immediate Payment Service)

In addition to the facility for the electronic modes of payment following modes has been has been prescribed:-

i) Debit card powered by rupay

ii) UPI, BHIM-UPI

iii) UPI QR Code, BHIM-UPI QR Code

Instruction has been given to bank that no bank or system shall impose or charge on payer or a beneficiary receiving payment through electronic modes prescribed under this section .

Conclusion of 269SU

Suppose a company in preceding financial year turnover is more than Rs 50 crore shall w.e.f. 01.02.2020 shall install or operationalize Digital payment system to accept payment from their customer through modes specified under rule 119AA .If the company fails to do this a penalty of 5000/- per day will be levied from 01.02.2020. So the eligible taxpayers  w.e.f 1st Feb 2020 shall not accept any payment through cash .

This provision has been inserted in order to move toward cashless Economy.

Penalty shall be imposed by Joint Commissioner of Income Tax.

No Penalty shall be imposed if there is sufficient cause for such failure.

Thank You

Any advise on this matter is accepted

Author Bio

Qualification: CA in Practice
Company: N/A
Location: New Delhi, IN
Member Since: 17 Jul 2019 | Total Posts: 1

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5 Comments

  1. CH V S V PRASAD says:

    Under this section, public sector bank is considered as merchant required to make available the above three facilities in every branch. The ordinary cash deposits in to customer accounts should be compulsorily covered by the stipulation of acceptance of digital payment.

  2. narendra joshi says:

    if company has retail outs that’s turnover is not exceeding Rs. 50 Crores but Company’s total Turn over exceeding 50 Crores, then this section applies?

    1. Ashish Dey says:

      As per section 269SU we would take turnover of company as a whole rather than individual retail outlet.
      As per general perception of income tax act, any applicability of section based on turnover we would take aggregate turnover of company.
      Hope this suggestion will help you the same
      Any comment on this matter is accepted.

  3. Manoj Pasari says:

    Company fulfilling the applicability criteria needs to MAKE AVAILABLE the facility to accept payment through specified modes. It does not bar receipt through any other mode and at the same time compel customer to make payment through given means only.

    1. Ashish Dey says:

      Dear Sir
      It is not clear from the notification that this section bars reciept through any other modes prescribed under this section from customer.
      But the main motive of this section is to bring cashless and this section also prescribed penal provision if we doesnot provide digital payment system to customer
      Hope this suggestion will help you the same
      Any comment on this matter is accepted.

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