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Insertion of rule 119A, prescribing Electronic modes of accepting payments u/s 269SU

To encourage digital economy and move towards a less-cash economy, Section 269SU was introduced in Finance (No. 2) Act, 2019, whereby every person carrying on business, having a turnover of more than Rs.50 Cr. [‘specified person’] shall mandatorily provide facilities for accepting payments through prescribed electronic modes. Also, in this connection Section 271DB has been inserted to levy penalty of Rs. 5,000 per day in case of failure to comply with above provisions.


Also, Section 10A in the Payment and Settlement Act 2007 was inserted via Finance Act 2019 which provides that no charges shall be imposed on payer making payment, or a beneficiary receiving payment by bank or any other service provide. Consequent to which charges including Merchant Discount Rate shall not be charged from 01 " January, 2020 on payment made through prescribed electronic modes.



In this regard Central Board of Direct Taxes (CBDT) issued a notification dated 30th December, 2019 inserting Rule 119A, wherein electronic mode has been prescribed for the persons falling in the ambit of Section 269SU which are as follows:

  1. Debit Card powered by RuPay,
  2. Unified Payments Interface (UPI) (BHIM-UPI), and
  3. Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code).


Furthermore, Circular no. 32 /2019 was also issued on the same date considering the plight of taxpayers and to their convenience, CBDT clarified that penalty prescribed under section 271DB shall not be levied if the specified persons installs and operationalizes these facilities on or before 31" January, 2020. However, if the specified person fails to do so then he shall be liable to pay the penalty of Rs. 5,000 from 1st February 2020 for such failure.