Section 269SU of Income Tax Act. 1961 – Acceptance of Payment Through prescribed electronics modes

This section is inserted by the Act no. 23 of 2019, w.e.f. 1-11-2019.

About the section-

 “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.”

 

Relating Rule 119A

 The Prescribed Electronic Mode was notified through Income Tax Rules, Rule 119AA,

(The rule was Inserted by Income-tax (Sixteenth Amendment) Rules, 2019, w.e.f. 1-1-2020)

 

The rules provide Modes of payment for the purpose of section 269SU, read as follows:

 

“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 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).”

 

 

PENALTY FOR NON-COMPLIANCE

 

Section 271DB - Penalty for failure to comply with provisions of section 269SU

The section was inserted by the Act No. 23 of 2019, w.e.f. 1-11-2019, read as follows:

 

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.

 

THE GIST OF THE ABOVE ACT & RULE IS AS FOLLOWS:

Effectively applicable from: 1st 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)

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

 

 

CLARIFICATION REGARDING THE APPLICABILITY OF THE SECTION 269SU

 

CBDT through Circular No 12./2020 clarified that provisions of section 269SU of the Act shall not be applicable to a specified person having only B2B transactions (i.e. no transaction with retail customer/consumer) if at least 95% of aggregate of all amounts received during the previous year, including amount received for sales, turnover or gross receipts, are by other than cash.

 

INTERPRETATION OF THE ABOVE CIRCULAR

The provision of section 269SU won’t be applicable to a specified person if:-

1) It has no retail customer, and

2) 95% of sale amount is received through other than cash.