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Clarifications on set Electronic modes under section 269SU of the Income Tax

Clarifications on set Electronic modes under section 269SU of the Income Tax

Clarifications on Electronic - In continuance to the declared policy objective of the Government to encourage digital economy and move towards a less-cash economy, a new provision namely Section 269SU was passed in the Income-tax Act 1961, vide the Finance (No. 2) Act 2019, which offers that every person having a company turnover of more than Rs. 50 Crore shall mandatorily provide facilities for accepting payments through prescribed electronic modes. Moreover, a new provision namely Section 10A was also introduced in the Payment and Settlement Systems Act 2007, which defines that no Bank or system provider shall impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under Section 269SU of the Income-tax Act 1961. The following electronic modes of payment for the purposes of Section 269SU have been prescribed vide notification no. 105/2019 dated 30.12.2019:-

  • Debit Card powered by RuPay
  • Unified Payments Interface (UPI) (BHIM-UPI)
  • Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

A Circular no. 32/2019 dated 30.12.2019 has also been issued to clarify that based on section 10A of the Payment and Settlement Systems Act 2007, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01st January, 2020 on payment made through prescribed electronic modes. Moreover, in order to allow sufficient time to persons, who are required to provide facilities for accepting payments through prescribed electronic modes, to install and operationalize such facilities, it has been clarified that the penalty under section 271DB of the Act shall not be levied if the facilities are installed and operationalized on or before 31st January, 2020. However, failure to do so shall invoke penalty of five thousand rupees per day from 1st February, 2020 under section 271DB of the Act. It has been noted from the return of income furnished by you for the Assessment Year 2019-20 that your total sales/ turnover/ gross receipts during the financial year ending 31st March, 2019 exceeds Rs. 50 crore. Therefore, as per section 269SU of the Act, you are required to provide the facilities for accepting payment through the aforesaid prescribed electronic modes. These facilities are required to be operationalized by you on or before 31st January, 2020. Failure to do so may make you liable for levy of penalty of five thousand rupees per day from 1st February, 2020 under the Act. Source: https://www.incometaxindia.gov.in/communications/circular/circular_32_2019.pdf

 

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