Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

Electronic payments norms: CBDT relaxes norms for businesses having turnover of more than Rs 50 crore

The Central Board of Direct Taxes (CBDT) on May 20 exempted firms with more than Rs 50 crore turnover and engaged in only B2B businesses from the requirement of accepting payments only by electronic modes like RuPay or BHIM-UPI.

"It is clarified that the provisions of Section 269SU of the Act shall not be applicable to a specified person having only B2B transactions (i.e. no transaction with retail customer/consumer) if at least 95 per cent of aggregate of all amounts received during the previous year, including amount received for sales, turnover or gross receipts, are by any mode other than cash," the CBDT said in a circular.

To promote digital transactions and progress towards a less-cash economy, the government inserted a new provision, Section 269SU, in the Finance Act, 2019, requiring a person carrying on business and having sales/turnover/gross receipts from business of more than Rs 50 crore in the immediately preceding previous year to mandatorily provide facilities for accepting payments through prescribed electronic modes.

Subsequently, in December 2019, debit card powered by RuPay; Unified Payments Interface (UPI) (BHIM-UPI); and Unified Payments Interface Quick Response Code (UPI QR Code) were notified as prescribed electronic modes.

The Central Board of Direct Taxes (CBDT) said it has received representations stating that the requirement of mandatory facility for payments through the prescribed electronic modes is generally applicable in B2C (business to consumer) businesses, which directly deal with retail customers.

Moreover, since the prescribed electronic modes have a maximum payment limit per transaction or per day they are not so relevant to the B2B (business-to-business) businesses, which generally receive large payments through other electronic modes of payment such as NEFT or RTGS.

Mandating such businesses to provide the facility for accepting payments through prescribed electronic modes would cause administrative inconvenience and impose additional costs, CBDT said.

Nangia Andersen Consulting Director Shailesh Kumar said that since non instalation of such payment facility attracted a significant penalty of Rs 5,000 per day, many businesses were in doubt and were forced to install such payment facilities, even though such facilities (typically used by individual customers mostly) were never supposed to be used for such businesses, considering the nature of business or customer base.

"This is another instance that shows the government is responsive to needs and concerns of taxpayers as well as flexible to amend rules to remove genuine hardships of taxpayers," Kumar added.


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