Government has asked businesses with turnover exceeding Rs 50 crore to mandatorily provide electronic modes of payment from November 1.
To this end, a new provision, namely Section 269SU, has been inserted in the Income-tax Act, said Central Board of Direct Taxes in a statement on Friday.
The CBDT further said that another provision, Section 10A, has been added to the payment and Settlement Systems Act.
The provision prohibits banks and payment system providers from imposing any charge on transactions through electronic modes of payments specified in Section 269SU of the Income-tax Act. These new provisions will come into effect from November 1, 2019, the CBDT said.
The Centre has invited applications from banks and system providers to include their payment systems under the list of prescribed modes of digital transactions under Section 269SU.
In her Budget speech earlier this year, Finance Minister Nirmala Sitharaman had proposed to add a section to the Income-tax Act directing business with an annual turnover over Rs 50 crore to provide low-cost electronic modes of payments.
These include systems like BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT and RTGS.
For ensuring compliance, a suitable penalty provision is also proposed to be inserted in the Act, the Finance Minister had said.
In line with this, the Finance (No 2) Act 2019 prescribes a penalty of Rs 5,000 for every day that an eligible entity fails to comply with Section 269SU.