Income Tax Section 269SU - Acceptance of payment through prescribed electronic modes ( New section 187 )

 

Section 269SU of Income Tax Act — Mandatory Digital Payment Facility

Section 269SU is a compliance-focused provision that pushes businesses toward a less-cash economy. It requires certain businesses to provide digital payment options to customers.

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✅ 1. Basic Requirement of Section 269SU

Specified businesses must mandatorily provide prescribed electronic payment modes to their customers — in addition to any other payment methods.

👉 It is about offering digital payment, not forcing customers to use it.

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✅ 2. Who Must Comply?

Section 269SU applies to:

➡ Businesses whose total sales/turnover/gross receipts exceed ₹50 crore
in the immediately preceding financial year.

If turnover crosses this limit → compliance becomes mandatory in the current year.

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✅ 3. Prescribed Digital Modes (as notified)

The government has prescribed low-cost digital payment systems such as:

• Debit card powered by RuPay

• UPI (BHIM-UPI)

• UPI QR code

• Other notified electronic modes

These modes must be available without extra charges to customers.

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✅ 4. No Charges Rule

Businesses complying with Section 269SU:

✔ Cannot impose MDR/charges on customers
✔ Must absorb the cost (if any)

This ensures digital payment remains accessible.

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✅ 5. Penalty for Non-Compliance

Penalty under Section 271DB:

➡ ₹5,000 per day
for failure to provide prescribed digital modes.

Penalty continues until compliance is achieved.

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✅ 6. Objective of Section 269SU

The provision aims to:

• Promote digital economy

• Reduce cash dependency

• Improve transaction transparency

• Support financial inclusion

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✅ 7. Practical Examples

✔ Example 1 — Mandatory compliance

A retail chain with ₹65 crore turnover last year
→ Must provide UPI/RuPay facility
Failure → daily penalty applies.

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✔ Example 2 — Small business exemption

A shop with ₹20 crore turnover
→ Section 269SU does not apply.

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