The Central Board of Direct Taxes (CBDT) vide a circular dated 20th May 2020 has exempted the business having only business to business (B2B) transactions i.e. no transaction with the retail customer from deploying certain e-payment facilities using debit cards powered by RuPay, Unified Payments Interface (UPI) and Unified Payments Interface Quick Response Code (UPI QR Code).
To encourage cashless economy, Section 269SU was inserted in the Income-tax Act, 1961 vide the Finance (No.2) Act 2019. This Section mandates every person carrying on business and having sales/turnover/gross receipts from business of more than Rs 50 Crores in the immediately preceding previous year to mandatorily provide facilities for accepting payments through electronic modes using using debit cards powered by RuPay, Unified Payments Interface (UPI) and Unified Payments Interface Quick Response Code (UPI QR Code). That means all business entities with a business volume of Rs. 50 crore or more annually must provide facilities and accept payments through digital transactions. Violation of these will cost fine of Rs. 5,000 per day from 1st February 2020.
But CBDT has been receiving many representations from B2B businesses as the mandatory facilities generally applicable in B2C (Business to Consumer) businesses, and they are not so relevant to B2B businesses, which generally receive large payments through other electronic modes of payment such as NEFT or RTGS. Thus, in the view of the above, CBDT clarified that the provisions of section 269SU of the Income Tax Act 1961 shall not be applicable to business having only B2B transactions if at least 95% of the aggregate of all amounts received during the previous year is by any mode other than cash.