Clarification on Insertion of new section 269SU - Digital Payment Facility

CA Piyush Agarwal 
on 13 January 2020


Section 269SU - Digital Payment Facility

 

The Central Board of Direct Taxes (CBDT) informed that all companies or business entities with a business volume of Rs. 50 crore or more annually must provide facilities and accept payments through digital transactions. The regulation was introduced through Section 269SU of the Income Tax Act, a new section with effect from January 1st, 2020. Section 269SU shall be part of the Finance Act 2019. Non-compliance of this regulation shall lead to a fine of Rs. 5,000 per day. The fine will be effective from 1st February 2020 and would be initiated through the rules as informed in Section 271DB. The regulation was introduced through the circular no-32/2019 on 30th December 2019.

Prescribed Electronic Modes of Payment

Every person with a business turnover of more than Rs. 50 crore during the immediately preceding previous year have to mandatorily provide all the following modes for the purpose of acceptance of payment, which is in addition to the facility for other electronic modes of payment, if any, is provided by such person:

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

Instructions to the Bank

Section 10A of the Payment and Settlement Systems Act, 2007 which was inserted by the Finance Act provides that no bank or system provider shall impose and charge including Merchant Discount Rate (MDR)on a payer, or a beneficiary receiving payment, through electronic mode prescribed under Section 269SU of the Act.

Key Points of Section 269SU

 

- No direct or indirect charges shall be imposed by the system providers or banks for making payments digitally
- Section 269SU applies to all business entities or companies that have an annual turnover of Rs. 50 crore or more

Types of Electronic Fund Transfer: -

  • NEFT
  • RTGS
  • IMPS
  • The regulation of Section 269SU shall be effective from 1st January 2020
  • The GOI has provided a period of one month to make provisions for digital transaction
  • The regulation of Section 271DB shall be effective from 1st February 2020 Section 271DB

Fails to provide such facility

Liable to pay, by way of penalty, a sum of Rs. 5,000 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

Any penalty imposable under sub-section (1) of this section shall be imposed by the Joint Commissioner of Income-tax

As per clarification issued by CBDT dated 30th December 2019 penalty will not be levied if prescribed class of person install and operationalize such facility on or before 31st January 2020

 

SUMMARY

SECTION 269SU

APPLICABILITY:

  • Applies to every person
  • Carrying on business and
  • The turnover of the business exceeds Rs. 50.00 crore during the immediately preceding previous year

EFFECTIVE DATE OF ENFORCEMENT:

This section came in to effect from 01-01-2020 and to equip yourself time is given up to 31-01-2020.

IMPLICATION & MODES OF PAYMENT:

Such business has to provide facility for accepting payment through following electronic modes, in addition to the facility for other electronic modes of payments.

Such modes of payments are notified vide notification no. 105/2019 of CBDT dated 30th Dec-2019 are as follows:

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

CONSEQUENCE OF NON COMPLIANCE OF THIS SECTION:

The penalty of Rs. 5,000 per day and will be effective from 01-02-2020 under section 271DB for failure to comply with provisions of section 269SU.


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