Section 269SU - Online Compliance Report on e-filing Account

section-269su-online-compliance-report-on-e-filing-account

Income tax department has started sending emails to remind the taxpayers about the applicability of section 269SU if a taxpayer's turnover as per ITR is more than Rs. 50 crore. A compliance report is required to be submitted online on the e-filing website from the taxpayer's account. The online compliance response in such cases shall be done by 31st January 2020.


The Finance (No. 2) Act, 2019 has introduced a new section in the Income Tax Act, 1961 namely, section 269SU to provide that every person having a business turnover of more than Rs 50 Crore shall mandatorily provide facilities for accepting payments through prescribed electronic modes.



Section 269SU came into effect from 1st November 2019.


Section 269SU requires that such a business entity shall provide the facility to its customers or debtors to pay through prescribed electronic modes. It is a mandatory provision for an eligible entity to provide the facility for digital payments. The payer may or may not pay through the prescribed modes.


If the business entity is already providing any existing facility for electronic mode of payment then such a business entity shall provide the new facilities which will be prescribed under this section.

The primary objective of the provision is to encourage the digital economy and move towards a less-cash economy. After the introduction of the provision, a business entity is duty-bound and under a legal obligation to provide the electronic mode of payments facility to its customers.

To ensure compliance with the provisions of section 269SU, the law has provided a penalty for failing to comply with the provisions of section 269SU.

For this purpose, section 271DB is introduced by the Finance (No. 2) Act, 2019. The section provides for a penalty of Rs. 5,000  for every day during which such failure continues.

To promote the digital payments and to make it cost-effective, a consequential amendment is also made in the Payment and Settlement Systems Act, 2007.

A new section 10A is added in the Payment and Settlement Systems Act, 2007 to provide for waiving the charges on the digital payments for both the payer and the receiver.

The CBDT has notified the prescribed modes of payments under section 269SU by a Notification No. 105/2019 dated 30.12.2019 and amended the Income Tax Rules, 1962.

Update:

CBDT provided exemption for applicability of Section 269SU

A new Rule 119AA is inserted in the Income Tax Rules, 1962 to mandatorily provide for the following electronic modes of payments in addition to the facility for other electronic modes of payment, if any, being provided, namely-


(i) Debit Card powered by RuPay;
(ii) Unified Payments Interface (UPI) (BHIM-UPI); and
(iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

The new Rule 119AA will come into effect from 01.01.2020.

In order to provide sufficient time to the specified persons to install and operationalize the facility for accepting payment through notified prescribed electronic modes, the CBDT has set 31st January 2020 as the last date within which such facilities shall be installed and operationalized by such persons by a Circular No. 32/2019 dated 30.12.2019.

If the specified person fails to install and operationalize the facility for accepting payment through prescribed electronic modes within January 31, 2020, then penalty u/s 271DB will be levied from February 1, 2020, for such failure.

On 20th January 2020, the income-tax department has sent emails to eligible entities whose turnover was more than Rs. 50 crore on the basis of the return of income furnished by the taxpayer for the Assessment Year 2019-20.

The email states "it has been noted from the return of income furnished by you for the Assessment Year 2019-20 that your total sales/ turnover/ gross receipts during the financial year ending 31st March, 2019 exceeds Rs. 50 crore. Therefore, as per section 269SU of the Act, you are required to provide the facilities for accepting payment through the aforesaid prescribed electronic modes. These facilities are required to be operationalised by you on or before 31st January, 2020. Failure to do so may make you liable for levy of penalty of five thousand rupees per day from 1st February, 2020 under the Act."

The email also reminds the objective of introducing section 269SU by the government.

Copy of an email is attached.

section-269su-online-compliance-report-on-e-filing-account

On 27th January 2020, the income tax department has again sent an email having the same subject line of the previous email but has a different content this time.

The new email states that the taxpayer should inform the income tax department of the prescribed modes made available to the customers. For this purpose, a functionality is enabled in the e-Filing Portal.

The email further states how a taxpayer can inform the income-tax department about his compliance of section 269SU.

A taxpayer can furnish the details by following the steps:

Login with User id and password in e-Filing portal (https://www.incometaxindiaefiling.gov.in)

Navigate to .Compliance. . .Prescribed Payment Modes. . Submit response.

As per the email, the last date for furnishing the details is 31st January 2020. Failure to do so attracts a penalty of Rs. 5,000 per day.

The penalty will be imposed on and from 01-02-2020. Hence, one must file the declaration by 31-01-2020 to avoid any penalty.

The fact of submission of the online compliance report was never communicated earlier either in the Notification or in the Circular. Neither the fact was disclosed by any other mode of communication. Suddenly, it was communicated 4 days prior to the deadline of 31-01-2020 by email to an eligible taxpayer.

Now when an eligible taxpayer log-in his e-filing account, he is welcomed with a pop-up message which reads as follows-

"As your total sales/ turnover/gross receipts from business exceeds Rs 50 crore, you are required to provide compliance on the prescribed electronic modes of payment provided to customers as per Rule 119AA of the Income Tax Act, 1961. Please click on 'Continue' to provide the same."

section-269su-online-compliance-report-on-e-filing-account


On pressing the 'Continue' button, he is taken to the compliance page.

The message is wrongly drafted and referred the Rule 119AA as a rule of the Income Tax Act, 1961. In fact, this is a Rule contained in the Income Tax Rules, 1962. (Refer Notification No. 105/2019 dated 30.12.2019)

The next page will display the 'Yes/No' option as shown below-

section-269su-online-compliance-report-on-e-filing-account

[Update:]

If 'No' is selected, it asks for 'Expected Date of Implementation' as shown below-


section-269su-online-compliance-report-on-e-filing-account

If 'Yes' is selected, it asks the three modes of payments which the taxpayer is installed as shown below-


section-269su-online-compliance-report-on-e-filing-account

One needs to tick or select the options and then click 'Submit'. Once successfully submitted, a success message will be displayed with Transaction ID as shown below-


section-269su-online-compliance-report-on-e-filing-account

Hence, the installation of the requisite facilities will not suffice. A compliance report should also be required to be furnished on the e-filing portal.


Suggested readings:

Is Cash or Cheque Payment or Receipt Banned-Section 269SU

CBDT Notified Prescribed Modes of Payment for Section 269SU

CBDT Sets Last Date for Prescribed Electronic Modes of Payment Section 269SU

Get all latest content delivered straight to your inbox
Sociliaze with Us

Post a comment

0 Comments