What is Section 269SU of the Income Tax Act? And Information on Rule 119a of the Income Tax Act

For any commercial establishment and every type of company whose total sales, turnover, or gross earnings from business exceeded Rs 50 crore in the immediately prior previous year, the government has defined certain ways of payment. The Finance Act of 2019 added a new section 269SU and announced Rule 119AA, which specifies the procedure of payment acceptance. In this article information such as “What is Section 269SU of the Income Tax Act?”, Rule 119a of the Income Tax Act, and other related information is mentioned.

What is Section 269SU of the Income Tax Act?

Every person who does business is required by Section 269SU to give the ability to receive payments via specified electronic modes. These prescribed modes of payment will be in addition to any other electronic payment methods that such person may already offer to clients.

When a person’s total sales, turnover, or gross earnings from a business surpass Rs 50 crore in the previous year, he or she is subject to Section 269SU. The section was in effect on November 1, 2019. In the case, if the sales, turnover, or gross receipts for the financial year ended 31 March 2019 exceed Rs 50 crore, the section applies.

Purpose of Section 269SU

The government’s goal to promote digital payments and a cashless economy includes the establishment of section 269SU. To encourage a cashless economy, the government is encouraging low-cost digital ways of payment as as UPI-QR Code, Aadhaar Pay,  BHIM UPI, specific Debit Cards, RTGS, NEFT, and others. As a result, the government has enacted Section 269SU, which requires businesses with an annual turnover of more than Rs 50 crore to provide their clients with specific low-cost digital payment options.

In addition, the bank or payment system provider is not allowed to charge customers or merchants any fees or merchant discount rates for using the payment methods specified in section 269SU. The Reserve Bank of India and banks must bear the costs associated with these payment methods.

Information on Rule 119a of the Income Tax Act

The Central Board of Direct Taxes (CBDT) announced the required electronic payment methods in accordance with section 269SU. The following are the modes:

• Unified Payments Interface (UPI),

• Unified Payments Interface Quick Response Code,

• Debit Card.

Since the implementation of Income-tax Act Rule 119AA on January 1, 2020, anybody who falls under the purview of Section 269SU or to whom this section applies must now make the above-mentioned ways of payment available to their customers.

Who all are applicable to Section 269SU of the Income Tax Act?

Every person who has a business with an annual turnover or total sale of Fifty crores or more during the immediately preceding previous year is subject to Section 269SU. The clause will also apply to the following assesses, according to rule 119 AA:

• An assessee who works in a business-to-business basis.

• An assessee who is solely focused on exports.

• A foreign company that does business in India and has a permanent presence there.

Information on Penalties for Non-Compliance to Section 269SU

If a person covered by the requirements of section 269SU fails to provide payment facilities through the required means, he or she will be fined Rs 5,000 for each day the facility is unavailable. If the individual installs and operationalized the prescribed payment facility by January 31,2020, no penalty will be imposed. If an individual fails to do so then, from February 1,2020, a daily penalty of Rs 5,000 will be imposed.

The Joint Commissioner of Income Tax has the authority to levy the penalty. A show-cause notice would normally be issued to such a person, requiring them to demonstrate why a penalty should not be levied for non-compliance. In addition, if the person who violated section 269SU establishes that there were good and adequate reasons for their failure, the Joint Commissioner may not impose a penalty.

Section 269SU E-Filing Portal Compliance 

• When you log into the Income Tax Department’s e-filing system, you will get a POP-up screen.

• To continue, select the ‘Continue’ tab.

• Select a payment method

• Once the above step is completed, click the ‘Submit’ button.

• The E-filing process will be completed.

Conclusion

If an entity’s total turnover, sales, or gross receipts, as the case may be, in business exceeded fifty crore rupees during the immediately preceding previous year, he shall provide a facility for accepting payment through prescribed electronic modes, in addition to the facility for other electronic modes of payment as per the Section 269SU of the Income Tax Act.