My turnover crossed Rs. 50 crore. Must I offer UPI and RuPay, and what does it cost me if I don't?
Yes, from 1 January 2020. A business whose turnover, sales or gross receipts exceeded Rs. 50 crore in the preceding previous year must provide three facilities under s.269SU: RuPay debit card, BHIM-UPI and UPI QR code. Section 271DB charges Rs. 5,000 for each day of default, and after the grace period the count runs from 1 February 2020.
Decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Tax Policy and Legislation Division) on 2019-12-30, reported as Circular No. 32/2019 (CBDT); F.No. 370142/35/2019-TPL. It bears on section 269SU, section 271DB, section 10A of the Payment and Settlement Systems Act 2007, section 187 (Act of 2025) of the Income Tax Act 1961, in Cash Transaction Limits and Penalty matters.
The obligation is mechanical and turnover-linked, so it bites even on a business that never receives money from retail customers unless the B2B relief applies. The daily penalty compounds quietly and is easy to miss until the exposure is large. The circular also carries the point clients most often want in writing: no bank or system provider may charge MDR on payments through the three prescribed modes.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 269SU was inserted by the Finance (No. 2) Act 2019 to require every person carrying on business with turnover, sales or gross receipts exceeding Rs. 50 crore in the immediately preceding previous year to provide facilities for accepting payment through prescribed electronic modes. Rule 119AA and Notification No. 105/2019 dated 30 December 2019 prescribed three modes — debit card powered by RuPay, UPI (BHIM-UPI) and UPI QR code. Trade raised questions on the interaction with bank charges and on businesses that deal only with other businesses. Circular 32/2019 issued the clarifications, and Circular 12/2020 dated 20 May 2020 followed with relief for pure B2B businesses.
A specified person must provide the facilities for accepting payment through the prescribed electronic modes with effect from 1 January 2020. Section 10A of the Payment and Settlement Systems Act 2007, inserted by the same Finance (No. 2) Act 2019, bars any bank or system provider from imposing a charge on a payer making payment, or a beneficiary receiving payment, through those modes, so MDR is not applicable on or after 1 January 2020. No penalty under section 271DB arises where the facilities were installed and operationalised on or before 31 January 2020; where they were not, the penalty of five thousand rupees a day runs from 1 February 2020. Circular 12/2020 clarifies that section 269SU does not apply to a specified person having only B2B transactions - that is, no transaction with a retail customer or consumer - if at least 95% of the aggregate of all amounts received during the previous year, including amounts received for sales, turnover or gross receipts, is received by a mode other than cash.
The obligation is turnover-linked and mechanical. Section 269SU applied to every person carrying on business whose total sales, turnover or gross receipts in business exceeded fifty crore rupees during the immediately preceding previous year, and it bit irrespective of how that business actually collected its money; the section carries no proviso. Circular 32/2019 fixed 1 January 2020 as the date from which the facilities had to be provided and tied the prohibition on charges to section 10A of the Payment and Settlement Systems Act 2007, which the same Finance (No. 2) Act 2019 inserted. Section 271DB carries a penalty of five thousand rupees per day, and the Board allowed a grace period expressly to let specified persons install and operationalise the facility: no penalty if that was done on or before 31 January 2020, the daily penalty running from 1 February 2020 if it was not. Circular 12/2020 answered representations that the mandate is in substance a business-to-consumer measure, and that because the prescribed modes carry a maximum payment limit per transaction or per day they are of little use to businesses that receive large payments by NEFT or RTGS, so that mandating them would cause administrative inconvenience and additional cost. The relief given is correspondingly narrow: the specified person must have only B2B transactions, with no transaction at all with a retail customer or consumer, and at least 95 per cent of the aggregate of all amounts received during the previous year - not merely sales - must be received by a mode other than cash.
Consequently, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01st January, 2020 on payment made through prescribed electronic modes.
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Handle my notice → Ask a CA on WhatsAppYes, from 1 January 2020. A business whose turnover, sales or gross receipts exceeded Rs. 50 crore in the preceding previous year must provide three facilities under s.269SU: RuPay debit card, BHIM-UPI and UPI QR code. Section 271DB charges Rs. 5,000 for each day of default, and after the grace period the count runs from 1 February 2020. This was decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Tax Policy and Legislation Division) and bears on section 269SU, section 271DB, section 10A of the Payment and Settlement Systems Act 2007, section 187 (Act of 2025) of the Income Tax Act 1961. It is reported as Circular No. 32/2019 (CBDT); F.No. 370142/35/2019-TPL. The obligation is mechanical and turnover-linked, so it bites even on a business that never receives money from retail customers unless the B2B relief applies. The daily penalty compounds quietly and is easy to miss until the exposure is large. The circular also carries the point clients most often want in writing: no bank or system provider may charge MDR on payments through the three prescribed modes. If it applies to you, the first step is this: Test the preceding previous year's turnover, sales or gross receipts against the Rs. 50 crore threshold, since crossing it triggers the obligation regardless of how the business actually collects money.
Section 269SU was inserted by the Finance (No. 2) Act 2019 to require every person carrying on business with turnover, sales or gross receipts exceeding Rs. 50 crore in the immediately preceding previous year to provide facilities for accepting payment through prescribed electronic modes. Rule 119AA and Notification No. 105/2019 dated 30 December 2019 prescribed three modes — debit card powered by RuPay, UPI (BHIM-UPI) and UPI QR code. Trade raised questions on the interaction with bank charges and on businesses that deal only with other businesses. Circular 32/2019 issued the clarifications, and Circular 12/2020 dated 20 May 2020 followed with relief for pure B2B businesses. The matter was decided on 2019-12-30 by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Tax Policy and Legislation Division). On those facts the CBDT Circulars & Instructions held as follows. A specified person must provide the facilities for accepting payment through the prescribed electronic modes with effect from 1 January 2020. Section 10A of the Payment and Settlement Systems Act 2007, inserted by the same Finance (No. 2) Act 2019, bars any bank or system provider from imposing a charge on a payer making payment, or a beneficiary receiving payment, through those modes, so MDR is not applicable on or after 1 January 2020. No penalty under section 271DB arises where the facilities were installed and operationalised on or before 31 January 2020; where they were not, the penalty of five thousand rupees a day runs from 1 February 2020. Circular 12/2020 clarifies that section 269SU does not apply to a specified person having only B2B transactions - that is, no transaction with a retail customer or consumer - if at least 95% of the aggregate of all amounts received during the previous year, including amounts received for sales, turnover or gross receipts, is received by a mode other than cash.
The obligation is turnover-linked and mechanical. Section 269SU applied to every person carrying on business whose total sales, turnover or gross receipts in business exceeded fifty crore rupees during the immediately preceding previous year, and it bit irrespective of how that business actually collected its money; the section carries no proviso. Circular 32/2019 fixed 1 January 2020 as the date from which the facilities had to be provided and tied the prohibition on charges to section 10A of the Payment and Settlement Systems Act 2007, which the same Finance (No. 2) Act 2019 inserted. Section 271DB carries a penalty of five thousand rupees per day, and the Board allowed a grace period expressly to let specified persons install and operationalise the facility: no penalty if that was done on or before 31 January 2020, the daily penalty running from 1 February 2020 if it was not. Circular 12/2020 answered representations that the mandate is in substance a business-to-consumer measure, and that because the prescribed modes carry a maximum payment limit per transaction or per day they are of little use to businesses that receive large payments by NEFT or RTGS, so that mandating them would cause administrative inconvenience and additional cost. The relief given is correspondingly narrow: the specified person must have only B2B transactions, with no transaction at all with a retail customer or consumer, and at least 95 per cent of the aggregate of all amounts received during the previous year - not merely sales - must be received by a mode other than cash. In the words reproduced by the source cited on this page: "Consequently, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01st January, 2020 on payment made through prescribed electronic modes."
It was decided by the CBDT Circulars & Instructions on 2019-12-30 and is reported as Circular No. 32/2019 (CBDT); F.No. 370142/35/2019-TPL. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 269SU, section 271DB, section 10A of the Payment and Settlement Systems Act 2007, section 187 (Act of 2025), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. A specified person must provide the facilities for accepting payment through the prescribed electronic modes with effect from 1 January 2020. Section 10A of the Payment and Settlement Systems Act 2007, inserted by the same Finance (No. 2) Act 2019, bars any bank or system provider from imposing a charge on a payer making payment, or a beneficiary receiving payment, through those modes, so MDR is not applicable on or after 1 January 2020. No penalty under section 271DB arises where the facilities were installed and operationalised on or before 31 January 2020; where they were not, the penalty of five thousand rupees a day runs from 1 February 2020. Circular 12/2020 clarifies that section 269SU does not apply to a specified person having only B2B transactions - that is, no transaction with a retail customer or consumer - if at least 95% of the aggregate of all amounts received during the previous year, including amounts received for sales, turnover or gross receipts, is received by a mode other than cash. It arises in Cash Transaction Limits and Penalty matters, on section 269SU, section 271DB, section 10A of the Payment and Settlement Systems Act 2007, section 187 (Act of 2025) of the Income Tax Act 1961, and was decided by Central Board of Direct Taxes, Tax Policy and Legislation Division. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the client deals only with other businesses, compute whether at least 95% of all amounts received during the year came in otherwise than in cash, counting every receipt and not just sales. Refuse and reverse any MDR charged by a bank or system provider on payments made through the prescribed modes. If the facilities went in late, count the days from 1 February 2020 to fix the s.271DB exposure before deciding how to respond.
Superseded by amendment. Neither circular has been withdrawn, modified or corrected, and the database carries no supersession annotation on either. What has changed is the statutory base. The Income-tax Act 1961 stands repealed, and the successor provision is section 187 of the Income-tax Act 2025, which is wider: it obliges a person carrying on business or profession to provide the prescribed facility where total sales, turnover or gross receipts in such business or profession exceed fifty crore rupees during the immediately preceding tax year, whereas section 269SU reached only a person carrying on business. Whether the Board has re-issued or expressly saved these circulars under the 2025 Act was searched for and not established. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Circular 32/2019 describes the threshold loosely as 'a business turnover of more than Rs 50 Crore'; the statutory test in section 269SU, and the description in Circular 12/2020, is total sales, turnover or gross receipts in business exceeding fifty crore rupees during the immediately preceding previous year. Work from the statutory formulation. The three prescribed modes under Notification No. 105/2019 - debit card powered by RuPay, BHIM-UPI and BHIM-UPI QR Code - are confirmed by Circular 12/2020. No judicial decision on section 271DB was located, so how the reasonable-cause defence under section 273B is applied to a daily penalty remains untested. The successor provision under the Income-tax Act 2025 is section 187, and it covers profession as well as business. No judicial decision on section 271DB was located. Whether the Board has re-issued or expressly saved Circular 32/2019 and Circular 12/2020 under the Income-tax Act 2025 was searched for and not established, and the prescribed electronic modes under section 187 of the 2025 Act were not separately checked against the Income-tax Rules 2026. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A specified person must provide the facilities for accepting payment through the prescribed electronic modes with effect from 1 January 2020. Section 10A of the Payment and Settlement Systems Act 2007, inserted by the same Finance (No. 2) Act 2019, bars any bank or system provider from imposing a charge on a payer making payment, or a beneficiary receiving payment, through those modes, so MDR is not applicable on or after 1 January 2020. No penalty under section 271DB arises where the facilities were installed and operationalised on or before 31 January 2020; where they were not, the penalty of five thousand rupees a day runs from 1 February 2020. Circular 12/2020 clarifies that section 269SU does not apply to a specified person having only B2B transactions - that is, no transaction with a retail customer or consumer - if at least 95% of the aggregate of all amounts received during the previous year, including amounts received for sales, turnover or gross receipts, is received by a mode other than cash.
TaxSphere, “CBDT Circular 32/2019”, https://taxnotice.vittsphere.com/caselaw/case/cbdt-circular-32-2019-269su/ (validity last checked 2026-08-19)
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