CBDT prescribes other electronic modes for the purpose of accepting and making payments under Income Tax Act, 1961

Ministry of Finance has issued Notification No 8/2020 dated 29th January, 2020 to amend the Income Tax Rules, 1962. A new Rule 6ABBA  has been inserted to prescribe the ‘other electronic modes’ for the purpose of accepting and making electronic payment under different sections of the Income-tax Act, 1961.

Key Points of the Notification are:

 

  1. The prescribed electronic modes as per new Rule 6ABBA are

(a) Credit Card;

(b) Debit Card;

(c) Net Banking;

(d) IMPS (Immediate Payment Service);

(e) UPI (Unified Payment Interface);

(f) RTGS (Real Time Gross Settlement);

(g) NEFT (National Electronic Funds Transfer), and

(h) BHIM (Bharat Interface for Money) Aadhar Pay;

  1. Relevant sections under which the above mentioned electronic payment of modes has been prescribed are as under :
  1. Any expenditure in respect of capital nature exceeding ten thousand rupees shall only be allowed as a deduction under Section 35AD for which the payment or aggregate of payments made to a person in a day, if the payments are made through an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or the electronic modes as prescribed;
  2. Any expenditure in respect of amount exceeding ten thousand rupees shall only be allowed as a deduction under Section 40A for which the payment or aggregate of payments made to a person in a day, if the payments are made through an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or the electronic modes as prescribed;
  3. No person shall take or accept from any other person (herein referred to as the depositor) under Section 269SS, any loan or deposit or any specified sum of an amount exceeding twenty thousand rupees or more otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account an amount exceeding twenty thousand rupees or more or through such other electronic mode as may be prescribed;
  4. No person shall receive an amount of two lakh rupees or more under Section 269ST otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed;
  5. No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person under Section 269T shall repay any loan or deposit made with it or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit or paid the specified advance, or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed
  1. The marginal heading in Rule 6DD of Income Tax Rules,1962 relating to cases and circumstances in which a payment or aggregate of payments exceeding twenty thousand rupees may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft has been substituted with “Cases and circumstances in which a payment or aggregate of payments exceeding ten thousand rupees may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed in rule 6ABBA.”

New rule 6ABBA shall be deemed to have been inserted retrospectively from the 1st day of September, 2019.

For further details please refer the attached document.

Source: Income Tax Department

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