Acceptance of payment through prescribed electronic modes - Section 269SU & Section 271DB - Income Tax - Ready Reckoner - Income Tax

Acceptance of payment through prescribed electronic modes - Section 269SU Purpose of Inserting of section 269SU The declared policy objective of the Government to encourage digital economy and move towards a less-cash economy, a new provision namely Section 269SU was inserted in the Income-tax Act, 1961 ( the Act ), vide the Finance (No. 2) Act 2019 , After section 269ST of the Income-tax Act, the following section shall be inserted with effect from the 1st day of November, 2019. Applicability 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 Rs.50 crore during the immediately preceding previous year. This threshold ensures that the requirement is targeted at medium and large businesses, rather than small enterprises or individuals. Prescribed Electronic Modes The modes are to be notified by the Central Government. Pursuant to this, Rule 119AA of the Income-tax Rules, 1962, was inserted, prescribing the following electronic modes: Debit Card powered by RuPay; Unified Payment Interface (UPI) (BHIM-UPI); and UPI Quick Response Code (UPI QR Code) (BHIM-UPI QR Code). Penalty for failure to comply with provisions of sections 269SU [ Section 271DB ] Applicability - w.e.f. from 01 st February, 2020, if assessee fails to complied Section 269SU then he shall be liable to pay by way of penalty. Quantum of Penalty - The penalty is Rs. 5,000 per day for each day during which such failure continues. Reasonable Cause Exemption - The first proviso to Section 271DB(1) provides that no penalty shall be imposed if the person proves that there were good and sufficient reasons for the failure. Authority for Imposition of Penalty Section 271DB(2) originally vested the power to impose penalty u/s 271DB(1) in the Joint Commissioner of Income-tax. However, the Finance Act, 2025 , has amended this position with effect from 1st April 2025. The amendment provides that from this date onwards, the penalty may be imposed by the Assessing Officer. Important Notification Circulars Not to impose any charge on any transaction carried through prescribed electronic modes under section 269SU of the Income-tax Act, 1961. [ Circular No. 32/2019 Dated 30.12.2019 and Circular No. 16/2020 Dated 30.08.2020 ] it is hereby clarified that the provisions of section 269SU shall not be applicable to a specified person having only B2B transactions (i.e. no transaction with retail customer/consumer) if at least 95% of aggregate of all amounts received during the previous year, including amount received for sales, turnover or gross receipts, are by any mode other than cash. [ Circular No. 12/2020 Dated 20.05.2020 ]