Whether sale in cash or against cheque, draft etc is prohibited now? Whether any undertaking is needed for accepting payment against cash sale?
There are lot of rumour and gossip that is going on all around which says that the person with turnover exceeding Rs. 50 Cr have to obtain the declaration from the purchaser that they are not having facility of making payment by banking channel and that’s why they are making the payment in cash or through cheque or draft.
Its not correct. The news circulated is false and bogus and misinterpretation of the section.
Let us see how and why.
Its all about section 269SU which reads as under as inserted by the FA – 2019 (Part II). Let us know about it first.
Section 269SU: Landmark Change by the Union Budget – 2019
Section 269SU has made it mandatory for the person with turnover exceeding Rs. 50 Crore to facilitate the payment by customer by electronic mode. A game changer provision is introduced in the Income Tax Act – 1961 by way of 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.
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, new section 269SU provides 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 is effective from 1st November, 2019.
Further, consequential amendment is done 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 is also effective from 1st November, 2019.
Section 269SU reads as under:
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.
It must be noted that the section mandates the availability of the facility for the customer and don’t mandates the said acceptance by the seller. The purchaser can opt to pay or not to pay through prescribed mode. If purchaser wants, the seller is duty bound to accept it in electronic mode.
The list of “prescribed mode” is yet not finalised and is under preparation by the CBDT.
It is expected to include E Modes like BHIM UPI, UPI-QR Code, Aadhaar Pay, Payment Gateways of banks / Financial Institutions / Payment Settlement Systems etc. The payment can be accepted by the seller in cash (subject to cap of Rs. 2 Lakh u/s 269ST) or by way of cheque or bank draft or ECG / RTGS without any undertaking.