Facilitating payments in electronic modes.

64

Any person carrying on business with total sales, turnover, or gross receipts exceeding fifty crore rupees in the preceding tax year shall provide facility for accepting payments through prescribed electronic methods, in addition to any other electronic payment methods, already offered.

Explanation

Section Summary:

Section 64 of the new income tax law mandates businesses with total sales, turnover, or gross receipts exceeding ₹50 crore in the preceding tax year to provide facilities for accepting payments through prescribed electronic modes. This provision aims to promote digital transactions and reduce reliance on cash, aligning with the government's broader push for a digital economy.

Key Changes:

1. Threshold for Applicability: The section applies to businesses with sales, turnover, or gross receipts exceeding ₹50 crore in the previous financial year. This is a new threshold introduced to target larger businesses.
2. Mandatory Electronic Payment Facilities: Businesses must now offer prescribed electronic payment methods, in addition to any existing electronic payment options they already provide. The term "prescribed electronic methods" refers to modes specified by the government, such as UPI, debit/credit cards, net banking, etc.

Practical Implications:

1. For Businesses: Businesses falling under the ₹50 crore threshold must ensure they have the infrastructure to accept payments through the prescribed electronic modes. This may involve upgrading payment systems, integrating new payment gateways, or training staff.
2. For Taxpayers/Customers: Customers will have more options to make digital payments, reducing the need for cash transactions. This could lead to greater convenience and transparency in transactions.
3. Compliance Burden: Businesses must ensure compliance with this provision to avoid penalties or scrutiny from tax authorities.

Critical Concepts:

1. Prescribed Electronic Methods: These are specific electronic payment modes mandated by the government, such as UPI, debit/credit cards, net banking, and other digital payment systems. The exact list may be notified by the government.
2. Total Sales, Turnover, or Gross Receipts: This refers to the total revenue generated by the business in the preceding financial year. It includes all income from sales, services, or other business activities.

Compliance Steps:

1. Assess Eligibility: Determine if your business exceeds the ₹50 crore threshold in the preceding financial year.
2. Integrate Electronic Payment Systems: Ensure that your business has the necessary infrastructure to accept payments through the prescribed electronic modes.
3. Update Systems and Processes: Train staff and update internal processes to handle digital payments efficiently.
4. Maintain Records: Keep records of transactions made through electronic modes to demonstrate compliance during audits.

Examples:

• Scenario 1: A retail chain with annual sales of ₹60 crore must now offer UPI, debit/credit card, and net banking payment options to customers, in addition to any existing payment methods like cash or cheques.
• Scenario 2: A manufacturing company with turnover of ₹45 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, particularly for larger businesses.