187

Every person shall provide facility for accepting payment, through electronic modes as prescribed, in addition to other electronic modes, if any, being provided by him, where––

• (a) such person is carrying on business; and
• (b) total sales, turnover, or gross receipts in such business exceeds fifty crore rupees during the immediately preceding tax year.

Explanation

Section Summary:

Section 187 of the new income tax law mandates that businesses with total sales, turnover, or gross receipts exceeding ₹50 crore in the immediately preceding tax year must provide facilities for accepting payments through prescribed electronic modes. This section aims to promote digital transactions and reduce reliance on cash payments, aligning with the government's push for a digital economy.

Key Changes:

• New Requirement: Businesses exceeding ₹50 crore in sales/turnover/gross receipts must now offer electronic payment facilities. This is a new compliance obligation introduced under the law.
• Prescribed Electronic Modes: The law specifies that businesses must accept payments through electronic modes as prescribed by the government, in addition to any other electronic payment methods they may already offer.

Practical Implications:

• For Businesses: Businesses meeting the threshold must ensure they have the necessary infrastructure to accept electronic payments. This may involve setting up point-of-sale (POS) systems, online payment gateways, or other digital payment solutions.
• For Taxpayers: Customers of these businesses will have the convenience of paying electronically, reducing the need for cash transactions.
• Compliance Burden: Businesses must ensure they comply with this requirement to avoid penalties or scrutiny from tax authorities.

Critical Concepts:

• Electronic Modes: Refers to digital payment methods such as credit/debit cards, UPI, mobile wallets, net banking, and other government-approved electronic payment systems.
• Threshold of ₹50 Crore: This applies to the total sales, turnover, or gross receipts of the business in the immediately preceding tax year. Businesses below this threshold are not obligated to comply with this section.

Compliance Steps:

1. Assess Eligibility: Determine if your business exceeds the ₹50 crore threshold in the previous tax year.
2. Set Up Electronic Payment Facilities: Implement the necessary systems to accept payments through prescribed electronic modes.
3. Maintain Records: Ensure proper documentation of electronic transactions for audit and compliance purposes.
4. Update Policies: Inform customers about the availability of electronic payment options.

Examples:

• Scenario 1: A retail chain with annual sales of ₹60 crore in FY 2022-23 must now provide electronic payment options (e.g., UPI, credit/debit cards) starting from FY 2023-24.
• Scenario 2: A small business with annual turnover of ₹40 crore is not required to comply with this section, as it falls below the ₹50 crore threshold.

This section reinforces the government's focus on digitalization and transparency in financial transactions, while also imposing additional compliance requirements on larger businesses.