Mandate to accept payment through prescribed electronic modes (Section 269 SU) By CA Sayan Ghosh


Finance Act 2019 provides a new provision, section 269SU with effect from 01-11-2019, to provide for acceptance of payment through prescribed electronic modes.

Section 269SU is breifly explained as follows:-

  • applies to every person, carrying on business

Every person implying that any individual, Hindu Undivided Family (HUF), company, firm or any other person as defined in section 2(31) of the Act.

Person must be carrying on busines, it could be any business - trading , manufacturing, construction, providing services, hotel, transport of goods/ passengers, real estate and etc. Also, exempt income arises from the business, the provision would apply.

Provision may not apply to a person carrying on profession or a person carrying on charitable or non-bussines activity.

  • his total sales, turnover or gross receipts, as the case may be, in the business should exceed Rs.50 crore during immediately preceding previous year;

This position will have to be examined by the person concerned every Financial year and ascertain whether the turnover exceeded the prescribed limit or not in the immediately preceding Financial Year and accordingly determine the need for compliance.

  • person should provide facility for accepting payments through prescribed electronic modes.

The person may have various offices or places of business, like, store or general offices or godowns. Such offices or places of business may not ordinarily accept payment, but they accept payment upon a request of the customers.

The person concerned may have to provide the electronic payment facility for accepting payments at every places where the business is carried on and / or the payment is accepted; however, it is not clearly so provided.

Alternatively, the Payment and Settlement System Act, 2007 is also amended to provide that no charges should be imposed, directly or indirectly, by banker, system provider for using the prescribed electronic mode of payment, on person making or receiving money.

A new penal provision Section 271 DB also inserted in the Act to comply with the provision with effect from 01-11-2019.

Penal Provision Section 271DB discussed as under:-

  • it applies to a person obliged to provide electronic payment facility for accepting payment reffered in section 269SU;
  • if the person fails to provide electronic payment facility, he is liable to penalty;
  • the penalty is Rs. 5,000 for every day during which such faliure continues;
  • if the person proves that there were good and sufficient reason for not providing the facility, the penalty may not be imposed and;
  • the penalty should be imposed by the Joint Commissioner of Income Tax.

Illustration to understand the penal provision:

Suppose Mr.Ghosh has sale of Rs.75 Crore, and he wants to open a another retail shop and such retail shop does not having the turnover of Rs. 50 Crore, the electronic payment facility is also not available in the retail shop till 31.01.2020.

In such case penalty is attracted and the levy of penalty could be for 91 days amounting to Rs. 4,55,000.

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