Mandating Electronic Payment Acceptance (Sections 269SU & 271DB)

To promote digital transactions, the Income Tax Act mandates certain businesses to compulsorily accept payments via prescribed electronic modes. Here’s a breakdown of Sections 269SU (requirement) and 271DB (penalty for non-compliance):

1. Key Provisions of Sections 269SU & 271DB

1. Who Must Comply? (Section 269SU)

Applicable to:

• Businesseswith total sales/turnover/receipts exceeding ₹50 crore in the previous financial year .
• Professionals(doctors, lawyers, etc.) with gross receipts > ₹50 crore .

Exemptions:

• Small businesses (< ₹50 crore turnover) .
• Transactions where digital payment is impractical (e.g., remote areas with poor internet) .

2. Mandatory Electronic Payment Modes

Businesses must enable and accept payments through:

✅ Debit/Credit Cards (Visa, Mastercard, RuPay)

✅ UPI (BHIM, PhonePe, Google Pay, etc.)

✅ Net Banking (NEFT/RTGS/IMPS)

✅ Prepaid Payment Instruments (PPI) (e.g., Paytm Wallet, Amazon Pay)

✅ Aadhaar-enabled Payment System (AePS)

Display Requirement:

• Must prominently displayaccepted digital payment options at business premises/website .

3. Penalty for Non-Compliance (Section 271DB)

If a business fails to comply:

• Penalty: ₹5,000 per day(from the date of default until compliance) .
• Maximum Cap:No upper limit (penalty continues accruing daily) .

Example:

• If a business refuses UPI payments for 30 days→ Penalty = 30 × ₹5,000 = ₹1.5 lakh .

4. How to Avoid Penalty?

• Enable digital paymentsbefore crossing ₹50 crore turnover .
• Display payment optionsclearly at checkout counters/websites .
• Train staffto accept digital payments .

5. Recent Updates (2024-25)

• CBDT Clarification (2024):Even if a business later falls below ₹50 crore turnover, it must continue digital payment acceptance .
• E-commerce Compliance:Online sellers must integrate UPI/net banking options .

6. Comparison with Other Cash Restrictions

7. Key Takeaways

✔ Large businesses (₹50cr+ turnover) must accept digital payments (UPI, cards, net banking).

❌ Refusing digital payments attracts ₹5k/day penalty (uncapped).

⚠ Display payment options prominently to avoid disputes.

2.  Penalty for Non-Compliance with Section 269SU (Under Section 271DB)

Section 269SU of the Income Tax Act, 1961, mandates large businesses (with turnover/receipts exceeding ₹50 crore in the preceding financial year) to accept payments through prescribed electronic modes. Failure to comply attracts a penalty under Section 271DB. Here’s a detailed breakdown:

1. Penalty Imposition

• Amount: ₹5,000 per dayfor every day of non-compliance .
• Authority: Levied by the Joint Commissioner of Income Tax(JCIT). From April 1, 2025, the Assessing Officer will have this power .
• Trigger: Applies to the business/person receiving payments, not the payer .

Example:
If a business fails to enable UPI payments for 10 days → Penalty = 10 × ₹5,000 = ₹50,000 .

2. Exceptions to Penalty

No penalty is imposed if the business proves “good and sufficient reasons” for non-compliance, such as:

• Technical failures(e.g., bank/POS system outages) .
• Genuine operational constraints(e.g., remote location with poor internet) .
• Compliance achieved within grace period(e.g., installed systems by January 31, 2020, as per CBDT Circular No. 32/2019) .

3. Prescribed Electronic Modes

Businesses must enable all of the following :

1. Debit Cards (RuPay-powered).
2. UPI (BHIM, PhonePe, Google Pay, etc.).
3. UPI QR Codes (BHIM-UPI QR).
4. Net Banking (NEFT/RTGS/IMPS).

Display Requirement:

• Must prominently showcase accepted digital payment options at premises/website.

4. Key Deadlines & Updates

• Effective Date: Section 269SU applied from November 1, 2019; penalties from February 1, 2020.
• Grace Period: Businesses given until January 31, 2020, to install systems .
• 2025 Change: Penalty authority shifts from JCIT to Assessing Officer.

5. Comparison with Other Cash Restrictions