Businesses having turnover more than Rs. 50 cr. must have a digital payment facility
We all might have come across a situation where the seller at malls /petrol pumps/restaurants/ hotels etc. etc. would have refused to accept the payment in electronic modes citing reasons like “We accept in cash only”, “We don’t use PAYTM”, “Debit card/credit card machine is not there or not working or network issues” etc., etc. To increase, promote digital payments, the Government has brought the businesses with a higher turnover to mandatorily provide the facility electronic mode of payment. Government plans to bring awareness to the public about the existence of low-cost digital modes of payment such as NEFT, RTGS, BHIM UPI, UPI-QR Code, Aadhaar Pay, PayTM, etc.
Who will be covered by the newly inserted sections 269SU & 271DB of the Income-tax Act,1961?
Any person who carries on a business and the total sales, turnover or gross receipts from the business exceeds fifty crore rupees during the immediately preceding previous year.
What needs to be done under section 269SU of the Income-tax Act?
With an intent to promote digital transactions and make India a less-cash economy, the Government has inserted section 269U in the Income Tax Act,1961 to make it mandatory w.e.f 1st November 2019 for the businesses whose turnover in FY 18-19 is more than Rs 50 crore shall mandatorily provide the facility of accepting the payments through prescribed electronic modes.
Note : Those prescribed electronic modes as per section 269SU have been notified in Rule 119AA. Click here to know the mandatory prescribed electronic modes one should have to accept the digital payments.
What happens if the provisions of section 269SU are not complied with?
To penalize the businesses for failure to comply with the provisions of section 269SU( i.e provide the facility to accept payments in digital modes) a new penal section 271DB has been inserted in the Income Tax Act,1961 which will impose a penalty of Rs five thousand per day for the period such failure continues.
But such a penalty will not be imposed if the person can prove that there were good and sufficient reasons for such failure.
Note: Penalty u/s 271DB can be imposed only by the Joint Commissioner of Income-tax.
How the Government plans to promote or encourage digital payments?
To promote digital payments, the Government has also inserted a new section 10A in The Payment and Settlement Systems Act, 2007 w.e.f 1st November 2019, that no banks or the providers of the digital payment system shall impose any charge upon anyone, either directly or indirectly, on a payer making a payment, or a beneficiary receiving payment” through electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961.
Section 269SU of Income Tax Act,1961- Acceptance of payment through prescribed electronic modes
After section 269ST of the Income-tax Act, the section 269SU shall be inserted with effect from the 1st day of November 2019, namely:—
“Every person, carrying on business, shall provide facility for accepting payment through prescribed electronic modes, in addition to the facility for other electronic modes, of payment, if any, being provided by such person, if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year.”.
Section 271DB of Income Tax Act,1961 – Penalty for failure to comply with provisions of section 269SU
After section 271DA of the Income-tax Act, section 271DB shall be inserted with effect from the 1st day of November 2019, namely:—
“(1) If a person who is required to provide the facility for accepting payment through the prescribed electronic modes of payment referred to in section 269SU, fails to provide such facility, he shall be liable to pay, by way of penalty, a sum of five thousand rupees, 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. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner of Income-tax.”.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner of Income-tax.”.
Section 10A of The Payment and Settlement Systems Act, 2007 – Bank, etc., not to impose a charge for using electronic modes of payment.
After section 10, the section 10A shall be inserted with effect from the 1st day of November 2019, namely:––
“Notwithstanding anything contained in this Act, no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961.”.
⊗ How will the government come to know that the facility for digital payment was not made available?
⊗ How will the service providers who provide the facility of electronic mode payment such as banks providing net banking, RTGS NEFT, credit cards/debit cards, PayTM, other wallets, UPI, etc. be aware that charges shall not be imposed upon the businesses as their turnover in the preceding financial year was more than Rs 50 Crores?