CBDT by Notification dated 30.12.2019 prescribed modes of payments for the purpose of section 269SU of the Income Tax Act, 1961 and amended the Income Tax Rules, 1962 which was made effective from 01st January 2020.
Now, the CBDT has set the last date to implement the requisite system for operationalise the prescribed electronic modes of payment under section 269SU.
The Income Tax Act, 1961 contains a provision in section 269SU which mandates any person carrying on a business having a turnover of more than Rs. 50 crore to provide for digital or electronic payment facilities to customers.
The objective of introducing such a legal provision is to achieve the government's objective of making the economy a less-cash and a digital economy.
A notification was issued by the CBDT on 30.12.2019 which notified Rupay Card, BHIM UPI, and UPI QR Code as the prescribed modes of electronic payments for the purpose of section 269SU.
For this purpose, necessary amendments in the Payment and Settlement Systems Act, 2007 is also made which prohibits banks or other payment system providers from levying any charge on sender and receivers of payments through these modes.
To ensure compliance with the provisions of section 269SU, the law has provided a penalty for failing to comply with the provisions of section 269SU.
For this purpose, section 271DB is introduced by the Finance (No. 2) Act, 2019. The section provides for a penalty of Rs. 5,000 for every day during which such failure continues.
In order to provide sufficient time to the specified persons to install and operationalize the facility for accepting payment through prescribed electronic modes, the CBDT has set 31st January 2020 as the last date within which such facilities shall be installed and operationalized by such persons.
If the specified person fails to install and operationalize the facility for accepting payment through prescribed electronic modes within January 31, 2020, then penalty u/s 271DB will be levied from February 1, 2020, for such failure.
The penalty is Rs. 5,000 per day and will continue till the failure continues.
The CBDT has clarified the above facts by a Circular No. 32/2019 dated 30.12.2019.
Update:
Read the text of the Circular-
Circular No. 32/2019
F.No.370142/35/2019-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
****
Dated: 30th December, 2019
Sub.: Clarifications in respect of prescribed electronic modes under section 269SU of the Income-tax Act, 1961 - reg.
In furtherance 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 inserted in the Income-tax Act, 1961 ("the Act"), vide the Finance (No. 2) Act, 2019 ("the Finance Act"), which provides that every person having a business turnover of more than Rs 50 Crore ("specified person") shall mandatorily provide facilities for accepting payments through prescribed electronic modes. The said electronic modes have been prescribed vide Notification No. 105/2019 dated 30.12.2019 ("prescribed electronic modes"). Therefore, with effect from 01st January, 2020, the specified person must provide the facilities for accepting payment through the prescribed electronic modes. Further, Section 10A of the Payment and Settlement Systems Act 2007, inserted by the Finance Act, provides 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 Act. Consequently, 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.
2. In this connection, it may be noted that the Finance Act has also inserted section 271 DB in the Act, which provides for levy of penalty of five thousand rupees per day in case of failure by the specified person to comply with the provisions of section 269SU. In order to allow sufficient time to the specified person to install and operationalise the facility for accepting payment through the prescribed electronic modes, it is hereby clarified that the penalty under section 271 DB of the Act shall not be levied if the specified person installs and operationalises the facilities on or before 31st January, 2020. However, if the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees per day from 01st February, 2020 under section 271 DB of the Act for such failure
Ankur Goyal
Under Secretary to the Govt. of India
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