Section 269SU not applicable for specified persons having only B2B transactions

In furtherance to the declared policy objective of the Government to encourage digital transactions and move in the direction of a Cash Less economy system, a new provision particularly Section 269SU was inserted within the Income-tax Act, 1961 (“the Act”), vide the Finance (No.2) Act 2019.

This section requires every person carrying on business and having sales/turnover/gross receipts from the business of more than Rs 50 Crores (“specified person”) in the immediately previous year to mandatorily provide facilities for accepting payments by prescribed digital/electronic modes. Subsequently, vide notification no. 105/2019 dated 30.12.2019 (i) Debit Card powered by RuPay; (ii) Unified Payments Interface (UPI) (BH IM-UPI); and (iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code) had been notified as prescribed digital modes.

Representations have been obtained stating that the above requirement of a mandatory facility for payments by the prescribed digital/electronic modes is usually applicable in B2C (Business to Consumer) businesses, which directly deal with retail customers.

Moreover, because the prescribed electronic modes have the maximum payment limit per transaction or per day they don’t seem to be so related to B2B (Business to Business) businesses, which usually obtain large funds by different electronic modes of payment similar to NEFT or RTGS. Mandating such businesses to provide the facility for accepting payments by prescribed digital/electronic modes would trigger administrative inconvenience and impose extra costs.

In view of the above, it’s hereby clarified that the provisions of section 269SU of the Act shall not be relevant to a specified individual having solely B2B transaction s (i.e. no transaction with retail customer/consumer) if at least 95% of the aggregate of all amounts received during the previous year, including the amount received for sales, turnover or gross receipts, are by any mode other than cash.

Read more from here: Circular No. 12/2020 Dt. 20th May,2020

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