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269SU applicable only to B2C transactions : CBDT Clarifies

CBDT Clarifies vide circular 12/2020 that the requirement to provide facility to receive payments through specified modes will not be applicable to B2B transactions

The government in Finance Act No 2, 2019 had introduced section 269SU which required every person having turnover of more than 50 crore in the previous year to mandatorily provide facility to accept payments through prescribed electronic modes.

The specified electronic modes were

i. Debit card powered by RuPay

ii. Unified Payments Interface (UPI) (BHIM-UPI)

iii. Unified Payments Interface Quick Response Code (UPI QR Code)


This was brought into effect from 1st January 2020. This was part of the government’s initiative for the promotion of digital payments and a cashless economy. The government is promoting low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay to promote a cashless economy


Failure to comply with 269SU provided for a penalty of Rs 5,000 for every day during which the failure or non-availability of the facility. The penalty of Rs 5,000 per day would be leviable from 1 February 2020.


The amendment though brought about with good intention was not well though out. It failed to recognize the large number B2B transactions that take place throughout the day. B2B payments usually happen through NEFT or RGTS. For B2B transaction, these prescribed modes are not suitable due to the limits fixed per transaction or per day. Mandating business to provide facility for accepting payments through prescribed electronic modes would cause administrative inconvenience and impose additional costs.


The requirement of providing mandatory facility for payments through the prescribed electronic modes are generally applicable for B2C business, which directly deal with retail customers.


In view of the above, CBDT vide circular 12/2020 dated 20.05.2020 clarified that provisions of section 269SU will not be applicable to a person having only B2B transaction. Subject to the condition that at least 95% of all amounts received during the previous year by way of sale, turnover, gross receipts is by any mode other than cash.

(Contributed by Roshan Thomas, FCA)

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