Section 187 Acceptance of payment through prescribed electronic modes.

Income-tax Act, 2025

At a Glance

The texts reproduced are (1) Section 187 of the Income-tax Act, 2025 (final statute text) and (2) Clause 187 of the Income Tax Bill, 2025 - Old Version (legislative bill text). Both provisions require persons carrying on business or profession to provide facilities for accepting payments through prescribed electronic modes where total sales, turnover or gross receipts exceed fifty crore rupees in the immediately preceding tax year. The requirement affects taxpayers (businesses/professionals) above the threshold and, indirectly, tax administration and payments infrastructure providers. Effective date or commencement is: Not stated in the document.

Background & Scope

Statutory hooks: The provision appears as Clause/Section 187 under the heading "MODE OF PAYMENT IN CERTAIN CASES, ETC." in the Income Tax Bill/Act, 2025. Context: the provision mandates acceptance of payments by certain electronic modes for persons carrying on business or profession crossing a monetary threshold. Coverage: persons carrying on business or profession whose total sales, turnover or gross receipts exceed fifty crore rupees during the immediately preceding tax year. Definitions/explanations: the texts do not define "electronic modes", "prescribed electronic modes", "person", "business", "profession", "total sales, turnover or gross receipts" or how multiple businesses are aggregated. Not stated in the document.

Statutory Provision Mode

Text & Scope

Coverage: The provision applies to "every person" who is "carrying on business or profession" and whose total sales, turnover or gross receipts in such business or profession exceeds fifty crore rupees during the immediately preceding tax year. The obligation is to "provide facility for accepting payment, through electronic modes as may be prescribed, in addition to other electronic modes, if any, being provided by him." Ingredients/elements: (i) actor - every person carrying on business or profession; (ii) threshold - total sales, turnover or gross receipts > Rs. 50 crore in the immediately preceding tax year; (iii) duty - to provide facility for accepting payment via prescribed electronic modes (in addition to any other electronic modes already offered). The triggering period for the threshold is the "immediately preceding tax year." The nature of the duty is operational (to provide facility), not merely to enable or permit such modes. The phrase "as may be prescribed" indicates that specific electronic modes and operational prescriptions will be specified by subordinate legislation/notifications.

Interpretation

Legislative intent and interpretive principles indicated by the text: The provision aims to expand and standardise electronic payment acceptance among larger businesses/professionals, likely to enhance traceability, digitisation of the economy and tax compliance. The use of "shall" denotes a mandatory obligation. The phrase "in addition to other electronic modes, if any, being provided by him" suggests that the prescribed modes are minimum required channels and do not supplant existing electronic payment facilities. The inclusion of "as may be prescribed" signals reliance on delegated legislation for specifying the exact electronic modes and perhaps technical or procedural standards. The text implicitly contemplates an objective monetary threshold to capture large entities; the reference to the "immediately preceding tax year" suggests retrospective application based on the prior year's turnover to determine obligation in the current year.

Exceptions/Provisos

Carve-outs, thresholds, conditions: The provision contains the threshold (Rs. 50 crore) as the sole conditional trigger. No provisos, exemptions, de minimis exceptions, sectoral carve-outs or special cases are provided in the text. Not stated in the document: specific exemptions (e.g., for certain classes of persons), transitional relief, penalties for non-compliance, timelines for implementation, technological standards, or enforcement mechanisms.

Illustrations

• Example 1: A manufacturing company with total sales of Rs. 60 crore in FY 2023-24 (immediately preceding tax year) is required in the current year to provide facilities to accept payments through the electronic modes prescribed by the competent authority, in addition to any electronic modes it already offers. (This example is a direct application of the text; no additional factual details beyond turnover threshold are assumed.)
• Example 2: An individual architect operating a practice with gross receipts of Rs. 55 crore in the immediately preceding tax year falls within the provision and must provide the prescribed electronic payment facilities. (This applies the provision to a "profession" where the Act text includes "profession".)

Interplay

Interaction with Rules/Notifications/Circulars: The text expressly contemplates subordinate prescriptions ("as may be prescribed" / "as prescribed") for the electronic modes. Not stated in the document: which Rule-making power is being invoked, the particular authority tasked with prescription, or any existing Notifications/Circulars that supplement this provision. Therefore, the detailed modalities, definitions of prescribed modes, certification or compliance processes will depend on later rulemaking or administrative guidance. Not stated in the document: interaction with other provisions of the Income-tax Act relating to payment mechanisms, penalties, or information reporting obligations; any cross-reference to goods and services tax or Reserve Bank of India regulations concerning payment systems.

Comparison: Differences between the Two Texts and Practical Impact

Observed textual differences between Document 1 (Section 187, Income-tax Act, 2025) and Document 2 (Clause 187, Income Tax Bill, 2025 - Old Version):

• Wording parity: Both texts are substantively identical in operative content (requirement to provide facility for accepting payment through prescribed electronic modes where person carries on business/profession and exceeds fifty crore rupees in preceding tax year). The Act version begins with "Every person shall provide facility for accepting payment, through electronic modes as may be prescribed, in addition to other electronic modes, if any, being provided by him, where--" while the Bill version uses "through electronic modes as prescribed, in addition to other electronic modes, if any, being provided by him". This is a minor stylistic difference (use of "as may be prescribed" vs "as prescribed").
• Scope wording: Bill version specifies "such person is carrying on business" in clause (a) whereas the Act version uses "such person is carrying on business or profession" in clause (a). The Bill's main text already begins "Every person shall provide..." and its clause (a) only lists "carrying on business". However the Bill's prefatory sentence earlier in Document 2 (immediately above the clause text) refers to "carrying on business" (singular) and clause (b) uses "in such business". The Act text explicitly includes "profession" in the main sentence and clause (a).
  • Practical impact: the Act version more clearly extends the requirement to persons carrying on a profession as well as business; if the Bill version (Old Version) omitted "profession" in a clause that otherwise might have included it in the main sentence, it could create ambiguity whether professionals are covered. Given the two documents here, the Act clarifies inclusion of "profession".
• Formality: Document 1 is labelled as Section 187 of the Act, and Document 2 as Clause 187 of the Bill - Old Version.
  • Practical impact: transition from Bill to Act may include minor drafting refinements; stakeholders should rely on the enacted Act text for legal obligations.
• Annotations: Document 2 includes the explanatory note "Clause 187 of the Bill seeks to provide for accepting payment through prescribed electronic modes." Document 1 does not include that note.
  • Practical impact: the Bill commentary assists legislative intent readers, but does not alter operative obligations.

Practical Implications

• Compliance and risk areas: Entities whose previous-year turnover exceeds Rs. 50 crore must ensure they offer the mandated prescribed electronic payment modes. Risk areas include: failure to adopt the prescribed modes (legal non-compliance), misidentifying the relevant turnover period, and ambiguity over aggregation rules for multiple businesses or group entities. Not stated in the document: penalties or enforcement consequences for non-compliance.
• Record-keeping/evidence points: While the provision does not specify record-keeping, practical compliance will require documentary evidence of offered payment facilities (e.g., invoices showing accepted modes, bank or payment service provider contracts, website screenshots, receipts). Not stated in the document: specific records that must be maintained or produced to authorities.

Key Takeaways

• The provision mandates facility to accept payments through prescribed electronic modes for persons carrying on business or profession exceeding Rs. 50 crore turnover in the immediately preceding tax year.
• The Act text clarifies inclusion of "profession" alongside "business"; the Bill (Old Version) text was less explicit in one clause, creating potential ambiguity later clarified in the Act.
• The obligation is mandatory ("shall") and requires provision of prescribed modes in addition to existing electronic options.
• Key operational details (which modes are prescribed, technical standards, timelines, exemptions, penalties) are not contained in the provision and await subordinate legislation or administrative guidance.
• Compliance will depend on accurate turnover calculation for the immediately preceding tax year and implementation of prescribed payment channels; documentation evidencing compliance will be important though not specified.
• Stakeholders should monitor rulemaking and notifications to determine precise modalities and timelines; until such prescriptions are issued, the obligation's practical operation remains partly indeterminate.

Full Text:

Section 187 Acceptance of payment through prescribed electronic modes.