Central Board of Direct Taxes (CBDT) has vide notification 105/2019 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 (“prescribed electronic modes“). The said 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 119AA, 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 a facility for accepting payment through the prescribed electronic modes, in addition to the facility for other electronic modes of payment, if any, is 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.
Rule 119AA of the Income Tax Rules, 1962 reads as follows:
“119AA. Modes of payment for the purpose of section 269SU.- Every person, carrying on business, 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 shall provide facility for accepting payment through following electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person, namely:—
i) Debit Card powered by RuPay;
ii) Unified Payments Interface (UPI) (BHIM-UPI); and
(iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code).