Non-cash payments under I-T Act: 7 electronic modes get CBDT nod

BHIM, UPI, debit/credit cardsand net banking make the cut

The Central Board of Direct Taxes (CBDT) has included seven new electronic modes that will be accepted for making non-cash payments.

These include payments using debit card, credit card, net banking, IMPS, UPI, RTGS and BHIM.

These modes can be utilised for making payments and availing various benefits and relief under the Income-Tax Act, 1962.

Till now, the accepted banking channels for payments were account-payee cheque, demand draft and ECS, which could be used under various Income-Tax provisions instead of cash. “This is an enabling Rule introduced in the income tax law, which will significantly encourage businesses to accept payments through contemporary electronic modes of payments and promote the government’s stated objective of Digital India and less-cash economy,” said Shailesh Kumar, Director, Nangia Andersen Consulting. In a recent notification, the CBDT had said: “The following shall be the other electronic modes for the purposes of clause (d) of first proviso to section 13A, clause (f) of sub-section (8) of section 35AD, sub-section (3), sub-section (3A), proviso to subsection (3A) and sub-section (4) of section 40A, second proviso to clause (1) of Section 43, sub-section (4) of section 43CA, proviso to sub-section (1) of section 44AD, second proviso to sub-section (1) of section 50C, second proviso to sub-clause (b) of clause (x) of sub-section (2) of section 56, clause (b) of first proviso of clause (i) of Explanation to section 80JJAA, section 269SS, section 269ST and section 269T…” It further said that these would have been deemed to have been inserted from September 1, 2019.

Rule 6DD amended

The Finance Act 2019 had inserted a new section allowing acceptance of electronic modes of payments for persons with business of over ₹50 crore per year in terms of sales or gross turnover.

The CBDT, through the notification, also amended Rule 6 DD of the Income-Tax Act that allowed certain payments up to ₹20,000 per day made through cash. It has lowered this limit to ₹10,000 per day and allowed these electronic payment modes to be used.

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