Section 269SU: Landmark Change by the Union Budget – 2019

Now, it is mandatory for the person with turnover exceeding Rs. 50 Crore to facilitate the payment by customer by electronic mode. A game changer provision is proposed to be introduced in the Income Tax Act – 1961. It is section 269SU.  It has limited applicability in the FY 2019-20 but its net and scope is sure to be widened in years to come.

In order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulation of black money and to promote digital economy, it is proposed to insert a new section 269SU in the Act so as to provide that every person, carrying on business, shall, provide facility for accepting payment through the 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 in business exceeds Rs. 50 Crore during the immediately preceding previous year.

There is a penal provision if such fails to provide the above e payment mechanism by inserting new section 27IDB to provide that the failure to provide facility for electronic modes of payment prescribed under section 269SU shall attract penalty of a sum of Rs. 5,000/- for every day during which such failure continues.

However, the penalty shall not be imposed if the person proves that there were good and sufficient reasons for such failure. Any such penalty shall be imposed by the Joint Commissioner. This amendment will take effect from 1st November, 2019.

Further, it is proposed to make a consequential amendment in the Payment and Settlement Systems Act, 2007 so as to provide that no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the modes of electronic payment prescribed under section 269SU of the Income-tax Act. This amendment will take effect from 1st November, 2019.

Section 269SU reads as under:

269SU.

 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 fifty crore rupees during the immediately preceding previous year.

Above section 269SU will find stronger support from the department in days to come. The limit of Rs. 50 Crore will be reduced in years to come as well as it will be made mandatory to accept the payment in electronic mode in some cases. It will be a game changer provision for the department and will be useful in controlling the cash circulation in the economy. It will be useful in controlling the cash circulation in the economy.