Business having B2B transaction with 95% Non cash Sales exempt from Sec 269SU of Income Tax Act

Business having B2B transaction with 95% Non cash Sales exempt from Sec 269SU of Income Tax Act

CBDT issues clarification with respect to the prescribed electronic modes under section 269SU of the Income-tax Act, 1961 vide Circular No.12/2020 dated 20th May, 2020

Section 269SU is applicable to all Assessee whether they are Individual , HUF, Company, LLP or having any other status (irrespective of whether resident or not) if they are carrying business and , if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year

The Central Board of Direct Taxes (CBDT) has notified the prescribed modes of payment for the purpose of section 269SU:

a. Debit Card powered by RuPay
b. Unified Payments Interface

c. Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

The Rule 119AA is applicable from 1 January 2020. Hence, from 1 January 2020, any person to whom the provisions of section 269SU are applicable should make available to its customers the methods of payment prescribed in Rule 119AA.

B2B business model where the transactions are between businesses, use of the 3 prescribed modes of payment will be rarely used as generally the normal banking channels or NEFT or RTGS are the preferred mode of payments. There are payment limits on amounts that can be paid using the methods prescribed and we understand that the maximum payment that may be possible using these modes would be Rs. 100,000 – even for a RuPAY debit card, it will be based on the limit set by the RuPAY card holder. Hence it is almost likely that most B2B operators after incurring set up costs and promoting these methods, may not be able to use any of these methods because of the value of individual transaction.

Considering the practical difficulties government exempt Business having B2B transaction with 95% Non cash Sales exempt from Sec 269SU of Income Tax Act

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