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CBDT exempts B2B Businesses from Mandatory Digital Payment Facility
May, 21st 2020

The Central Board of Direct Taxes (CBDT) issued the clarification on Wednesday that the provisions of section 269SU of the Income Tax Act shall not be applicable to a specified person having only B2B transactions i.e. no transaction with the retail customer if at least 95% of the aggregate of all amounts received during the previous year, including the amount received for sales, turnover or gross receipts, or by any mode other than cash.

Earlier, CBDT informed that all companies or business entities with a business volume of  INR 50 crore or more annually must provide facilities and accept payments through digital transactions.

The regulation was introduced through Section 269SU of the Income Tax Act, a new section with effect from January 1st, 2020. Section 269SU shall be part of the Finance Act 2019. Non-compliance with this regulation shall lead to a fine of INR 5,000 per day. The fine will be effective from 1st February 2020 and will be initiated through the rules as informed in Section 271DB.


The Board received the representation stating, “the requirement of the mandatory facility for payments through the prescribed electronic modes is generally applicable in Business to Consumer, which directly deals with retail customers. Moreover, since the prescribed electronic modes have a maximum payment limit per transaction or pcr day they are not so relevant to the business to Business, which generally receive large payments through other electronic modes of payment such as NEFT or RTGS.”



The Board while addressing this hardship issued the circular stating, “the provisions of section 269SU of the Income Tax Act shall not be applicable to a specified person having only B2B transactions i.e. no transaction with the retail customer if at least 95% of the aggregate of all amounts received during the previous year, including the amount received for sales, turnover or gross receipts, or by any mode other than cash.”


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