Electronic Mode for Accepting Payment (Section 269SU read with Rule 119AA)
/ Others

Electronic Mode for Accepting Payment (Section 269SU read with Rule 119AA)

Overview:

  • In furtherance to the declared policy objective of the Government to encourage digital economy and move towards a less-cash economy,Section 269SU shall come into force with effect from 1st November, 2019. The Central Government proposes to promote electronic modes of payment for the payer for the purposes of Section 269SU.
  • No Bank / System provider shall impose any charges on payer / Receiver making or receiving payments through electronic modes prescribed U/s 269SU of the Act. Even Merchant discount rate (MDR) shall not be applicable on or after 01.01.2020.
  • Rule 119AA mode of payment under Sec 269SU has been inserted and effective from 1st day of January, 2020.

To whom Sec- 269 SU apply:
Every person carrying on business, If his total sales / Turnover or gross receipts in the business exceed 50 crores in the previous financial year (Specified Person) 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.

Rule 119AA Modes of payment for the purpose of Section 269SU:
Every person with a business turnover of more than Rs. 50 crores has 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.

Electronic Mode for Accepting Payment Note: Notification 105/2019 and Circular 32/2019 dated 30.12.2019, it can be inferred that all the 3 alternatives as mentioned in (a), (b) & (c) need to be provided for accepting payment through electronic modes.

Section 10A of Payment and Settlement System Act 2007
A new provision namely Section 10A was also inserted in the Payment and Settlement Systems Act 2007, which provides that Bank or system provider shall not 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.

Due Date for Compliance of Section 269SU:
Section 271DB of the Act shall not be levied if such person carrying on business installs and operationalises the facilities on or before 31st January, 2020.

Penalty for Violation of Section 269SU Provisions under Section 271DB:
Every person who fails to offer the prescribed modes (installation & operationalisation of the facilities) by 31st January 2020 would be subjected to a penalty of Rs. 5,000 per day of default with effect from 1st February, 2020.

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