Imposition of charge on the prescribed electronic modes under section 269SU of the Income-tax Act, 1961

Last updated: 31 August 2020

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This notification clarifies that businesses with a turnover over Rs. 50 crore must accept payments through specific electronic modes like RuPay, UPI, and UPI QR codes. Importantly, no bank or system provider should levy any charges on these transactions. Banks are instructed to immediately refund any charges collected since January 1, 2020, and refrain from imposing them in the future, to comply with the Income-tax Act and Payment and Settlement Systems Act.

Circular No.16../2020 F .No .370142/35/2019-TPL-Pt Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Dated: 30 August, 2020 Subject: Imposition of charge on the 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 transactions and move towards a less-cash economy. the Finance (No. 2) Act 2019 inserted a new pro

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FAQ :

Section 269SU mandates that businesses with a turnover exceeding Rs. 50 crore must provide facilities for accepting payments through prescribed electronic modes to encourage digital transactions.

The prescribed electronic modes are Debit Card powered by RuPay, Unified Payments Interface (UPI), and Unified Payments Interface Quick Response Code (UPI QR Code).

No, Section 10A of the Payment and Settlement Systems Act prohibits any bank or system provider from imposing charges on payers or beneficiaries for payments made through the prescribed electronic modes.

Banks are advised to immediately refund any charges collected on transactions made using the prescribed electronic modes on or after January 1, 2020.

Breaching these provisions can attract penal provisions under Section 271DS of the Income-tax Act and Section 26 of the Payment and Settlement Systems Act.

Circular No : 16/2020
Source : https://www.incometaxindia.gov.in/communications/circular/circular-16-2020.pdf

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