Businesses with a turnover of more than Rs 50 crore shall “mandatorily” have to make arrangements to accept payments through electronic modes from November 1, the Central Board of Direct Taxes said on Friday. The top body of the income tax department said no bank or provider of a digital payment system shall “impose any charge on a payer making payment, or a beneficiary receiving payment” through electronic modes.
In order to facilitate both companies and their clients, the government has decided to “prescribe” certain modes of payments for the purposes of “Section 269SU,” it said.
According to a PwC report on the budget, the section mandates every person carrying on business having turnover (sales or gross receipts) in excess of Rs 50 crore in the immediately preceding financial year to provide facility for accepting payments through prescribed electronic modes.
The law also provides for a penal provision in case of a default.
“If a person who is required to provide facility for accepting payment through the prescribed electronic modes of payment referred to in section 269SU, fails to provide such facility, he shall be liable to pay, by way of penalty, a sum of five thousand rupees, for every day during which such failure continues,” said the Finance (No 2) Act 2019.
The decision is based on the government’s decision to promote digital payments and less-cash economy articulated in the budget presented by finance minister Nirmala Sitharaman on July 5, 2019.
In her budget speech, the minister said there are low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT and RTGS, which can be used to promote less cash economy.
“I, therefore, propose that the business establishments with annual turnover more than Rs 50 crore shall offer such low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants,” she had said.
“RBI [Reserve Bank of India] and Banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment,” the speech said.
Source from HT media