In furtherance to the declared policy objective of the Government to encourage digital economy and move towards a less-cash economy, CBDT has prescribed Debit Card powered by RuPay; Unified Payments Interface (UPI); and Unified Payments Interface Quick Response Code as the prescribed electronic modes for accepting payments under newly inserted Section 269SU of the Income Tax Act, 1961. Notification No. 105/2019, dated 26-12-2019 inserts Rule 119AA in the Income Tax Rules, 1962 with effect from January 01, 2020 for this purpose.
According to the new Rule, every person carrying on ‘business’, if his total sales, turnover or gross receipts, in business exceeds Rs. 50 Crore (“specified person”) during the immediately preceding previous year shall provide facility for accepting payment through the above mentioned 3 electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person.
It may be noted that the said Rule has been inserted in line with Section 269SU of the Income Tax Act, which was inserted by Finance (No.2) Act, 2019 with effect from 1st of November 2019. It states that these specified persons shall mandatorily provide facilities for accepting payments through prescribed electronic modes.
The new provisions also provide for imposition of penalty in case of any failure to provide the facility. Specified persons not providing prescribed payment modes shall be liable to pay a penalty of Rs. 5000 per day under Section 271DB of the Income Tax Act, 1961. However, no such penalty will be imposed if such person proves that there were good and sufficient reasons for such failure.
Further, according to Circular No. 32/2019, dated 30-12-2019, the penalty under Section 271DB shall not be levied if the specified person installs and operationalises the facilities on or before 31st of January, 2020. Accordingly, penalty of Rs. 5000 per day will be imposed from 1st of February, 2020 for any such failure.