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ARTICLE · 28 MAY 2020

Exemption From Prescribed Electronic Payment Modes

BDO India LLP
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In order to encourage digital transaction and move towards a less-cash economy, section 269SU in the Income-tax Act, 1961 (‘IT Act') was introduced by the Finance (No. 2) Act, 2019.

IndiaTax
BDO India LLP
BDO India LLP

In order to encourage digital transaction and move towards a less-cash economy, section 269SU in the Income-tax Act, 1961 ('IT Act')1 was introduced by the Finance (No. 2) Act, 2019. Thereafter, the Central Board of Direct Taxes ('CBDT') notified a Rule 119AA2 in the Income Tax Rules, 1962 ('IT Rules') wherein the following 3 electronic payment modes were prescribed to encourage digital payments:

  • Debit Card powered by Rupay;
  • Unified Payments Interface (UPI) (BHIM-UPI); and
  • Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code).

Please click here to read our Alert in this regard. 

Subsequently, representations were made to the CBDT by various stakeholders expressing that B2B (Business to Business) businesses will be exempted from the applicability of above-mentioned payment modes on following reasoning:

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