The Central Board of Direct Taxes ( CBDT ) to levy a penalty for not providing facility to accept digital payments from February 1st, 2020.
In furtherance to the declared policy objective of the Government to encourage digital economy and move towards a less-cash economy, a new provision namely Section 269SU of the Income Tax Act was inserted vide the Finance ( No. 2) Act 2019, which provides that every person having a business turnover of more than Rs 50 Crore shall mandatorily provide facilities for accepting payments through prescribed electronic modes.
The said electronic modes have been prescribed vide notification no. 105/2019 dated 30.12.2019. Therefore, with effect from 1st January 2020, the specified person must provide the facilities for accepting digital payments through the prescribed electronic modes. Further, Section 10A of the Payment and Settlement Systems Act 2007, inserted by the Finance Act, provides that no Bank or system provider shall impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under Section 269SU of the Income Tax Act.
Consequently, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01 ” January 2020 on payment made through prescribed electronic modes.
In a Circular issued by CBDT said that the Finance Act has also inserted section 271 DB in the Income Tax Act, which provides for levy of penalty of five thousand rupees per day in case of failure by the specified person to comply with the provisions of section 269SU.
In order to allow sufficient time to the specified person to install and operationalize the facility for accepting payment through the prescribed electronic modes, it is hereby clarified that the penalty under section 271 DB of the Act shall not be levied if the specified person installs and operationalizes the facilities on or before 31″ January 2020.
However, if the specified person fails to do so, he shall be liable to pay a penalty of five thousand rupees ay m 01″ February 2020 under section 271 DB of the Act for such failure.
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