Central Board of Direct Tax has issued Circular No. 12/2020 Dated 20th May, 2020, wherein clarification has been which provides when provisions of section 269SU are not applicable.
Relevant Extracts of circular:
Since the prescribed electronic modes have a maximum payment limit per transaction or per day they are not so relevant to B2B (Business to Business) businesses, which generally receive large
payments through other electronic modes of payment such as NEFT or RTGS. Mandating such
businesses to provide the facility for accepting payments through prescribed electronic modes
would cause administrative inconvenience and impose additional costs.
it is hereby clarified that the provisions of section 269SU of the Act shall not be applicable to a specified person having only B2B transaction s (i.e. no transaction with retail customer/consumer) if at least 95% of aggregate of all amounts received during the previous year, including amount received for sales, turnover or gross receipts, are by any mode other than cash.
Full Text of the Circular has been mentioned below
“In furtherance to the declared policy objective of the Government to encourage digital
transactions and move towards a less-cash economy, a new provision namely Section 269SU was inserted in the [Income-tax Act, 1961 (“the Act”), vide the Finance (No.2) Act 2019. This
section requires every person carrying on business and having sa les/turnover/gross receipts from business of more than Rs 50 Crores (“specified person”) in the immediately preceding previous year to mandatorily provide facilities for accepting payments through prescribed electronic modes.
Subsequently vide notification no. 105/2019 dated 30.12.20 19 (i) Debit Card powered by RuPay;
(ii) Unified Payments Interface (UPI) (BH IM-UPI); and (iii) Unifi ed Payments Interface Quick
Response Code (UPI QR Code) (BHIM-UPI QR Code) were notified as prescribed electronic
modes.
2. Representations have been received stating that the above requirement of mandatory
facility for payments through the prescribed electronic modes is generally applicable in B2C
(Business to Consumer) businesses, which directly deal with retail customers. Moreover, since
the prescribed electronic modes have a maximum payment limit per transaction or pcr day they are not so relevant to B2B (Business to Business) businesses, which generally receive large
payments through other electronic modes of payment such as NEFT or RTGS. Mandating such
businesses to provide the facility for accepting payments through prescribed electronic modes
would cause administrative inconvenience and impose additional costs.
3. In view of the above, it is hereby clarified that the provisions of section 269SU of the Act
shall not be applicable to a specified person having on ly B2B transaction s (i.e. no transaction
with retail customer/consumer) if at least 95% of aggregate of all amounts received during the
previous year, including amount received for sales, turnover or gross receipts, are by any mode other than cash.”
Click here to download Circular
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Mr. Setia is a CA by Profession and expert in the field of Indirect Taxation Based in Delhi. Rich experience of over 5 year.