Upgrading Digital Economy and its impact By CA Sayan Ghosh

The Digital India programme is a flagship programme of the Government of India with a vision to create India into a digitally enhanced society and knowledgeable economy. http://cashlessindia gov.in

As part of upgrading cashless transactions and converting India into no-cash society, there are various modes of digital payments are available.

Basically, Previous Finance Act had made amendments in various provisions on Income Tax Act, 1961. These amendments permitted following modes of payments:-

  • by an account payee cheque drawn on a bank,
  • by an account payee bank draft; and
  • use of electronic clearing system through a bank account (ECS PAYMENT)

So, other electronic modes of payment were not specifically permitted in various provisions of the Act which prohibit cash transactions and allow/permitted payment or receipt in certain modes other than cash.

In order to insert other electronic modes of payments, Finance Act 2019 has made amendments in few sections of the Act so as to include therein " such other electronic mode as may be prescribed" in addition to the specified mode, as mentioned above. The CBDT will prescribe other electronic modes of payment.

Other electronic modes, possibly could be Banking Cards, Adhaar enabled Payment System, Bank Prepaid Cards, Unified Payments Interface (UPI), Internet Banking, Mobile Banking and other similar modes. This might be the possible modes of electronic payment.

Note:- This amendment will applicable for the following sections:-

13A, 35AD, 40A, 43, 43CA, 44AD, 50C, 56, 80JJAA, 269SS, 269ST, 269T.

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