Clarifications on prescribed electronic modes under section 269SU

The Central Board of Direct Taxes (CBDT) through a Notification 105/2019 and Circular 32/2019 made on 30th December 2019 had prescribed 3 Electronic Modes for accepting payment by individual having total sales, turnover, total gross receipts of above Rs. 50 Crore as stated in Section 269SU which governs ‘Acceptance of payment through prescribed modes’.

The provision shall be applicable from 1st January, 2020 (Rule 119AA) and it prescribes the following e-payment modes, which includes:

•    Debit Card powered by Rupay

•    Unified Payments Interface (UPI) – BHIM-UPI

•    UPI QR Code

The fine for non-compliance is Rs. 5,000 per day

However, no penalty shall be applicable under Section 271DB, if the individual installs and operationalizes the facilities on or before 31st January 2020.

Thus, the businesses, companies, shops get a final 1 month time to go digital as well as save themselves from shelling out heavy penalties.

As per the notification, in furtherance to the declared policy objective of the Government in order to encourage digital economy and move towards a less-cash economy, a new provision specifically Section 269SU has been inserted in the Income-tax Act, 1961 (“the Act”), by means of the Finance (No. 2) Act 2019 (“the Finance Act”), which furnishes that every individual having a business turnover of above Rs. 50 Crore (“specified person”) shall mandatorily furnish facilities for accepting payments through set electronic modes. The stated electronic modes have been prescribed through notification no. 105/2019 which was made on 30th December 2019 (“prescribed electronic modes”). Thus, with effect from 1st January 2020, the specified individual should provide the facilities for accepting payment through the set electronic modes. Furthermore, Section 10A of the Payment and Settlement Systems Act 2007, has been inserted by the Finance Act, furnishes that no Bank or system provider would impose any charge on a payer making payment, or a beneficiary receiving payment, by means of electronic modes set under Section 269SU of the Act. Therefore, any charge which includes the MDR (Merchant Discount Rate) shall not be applicable on or after 1st January 2020 on payment made through prescribed electronic modes.

As per this connection, it might be noted that the Finance Act has also introduced section 271DB in the Act, which furnishes for levy of penalty of five thousand rupees each day if there is a failure by the specified individual to comply with the provisions of section 269SU. For allowing sufficient time towards the specified individual to install as well as operationalize the facility for accepting payment through the prescribed electronic modes, it has been clarified that the fine under section 271DB of the Act would not be imposed if the specified individual installs and operationalizes the facilities on or before 31st January 2020. Though, if the specified individual fails to do so, he would be legally responsible to pay a penalty of five thousand rupees per day from 1st February 2020 under section 271DB of the Act for such failure.

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Author:

eStartIndia Team