The Direct Tax Code (DTC) 2025 mandates that specified persons must provide facilities for accepting payments through prescribed electronic modes. Banks and NBFCs, as payment facilitators, have specific obligations under this framework. This guide analyses the digital payment infrastructure mandates for banks and NBFCs.
The Digital Payment Mandate Framework
Section 187 — Mandatory Digital Payment Facility
Section 187 provides that every person carrying on business or profession 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:
- Such person is carrying on business or profession
- Total sales, turnover or gross receipts in such business or profession exceeds ₹50 crore during the immediately preceding tax year
Prescribed Electronic Modes — Rule 133
Rule 133 prescribes the following electronic modes:
- Debit Card powered by RuPay
- Unified Payments Interface (UPI) (BHIM-UPI)
- Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)
- Tier-III: Full KYC Central Bank Digital Currency wallets, P-CBDC, Wholesale or Cross-border CBDC
Additional Electronic Modes — Rule 48
Rule 48 provides a comprehensive list of other electronic modes recognised under the DTC, including:
- Credit Card
- Debit Card
- Net Banking
- IMPS (Immediate Payment Service)
- UPI (Unified Payment Interface)
- RTGS (Real Time Gross Settlement)
- NEFT (National Electronic Funds Transfer)
- BHIM (Bharat Interface for Money) Aadhaar Pay
Applicability to Banks and NBFCs
Banks
- Banks are typically engaged in the business of banking
- If total sales, turnover or gross receipts exceeds ₹50 crore, the mandate applies
- Banks already accept digital payments through multiple channels
NBFCs
- NBFCs engaged in lending and other financial services
- If total sales, turnover or gross receipts exceeds ₹50 crore, the mandate applies
- NBFCs must provide the prescribed electronic modes for accepting payments
Section 186 — Mode of Undertaking Transactions
Section 186 prohibits receipt of amounts of ₹2,00,000 or more except through specified banking or online modes. Banks and NBFCs must ensure compliance with this provision.
Compliance Requirements
Infrastructure Setup
Banks and NBFCs must:
- Set up the infrastructure to accept payments through prescribed electronic modes
- Display payment options prominently
- Provide prescribed modes in addition to other electronic modes
Prescribed Modes for Banks and NBFCs
- RuPay debit card acceptance
- UPI acceptance (BHIM-UPI)
- UPI QR code display
- CBDC wallet acceptance
Additional Requirements
- Ensure all prescribed modes are functional
- Display acceptance of these modes prominently
- Train staff on accepting these modes
- Maintain records of digital payments accepted
Practical Compliance
1. Assess Applicability
- Calculate total sales, turnover or gross receipts for the tax year
- Determine if the threshold (₹50 crore) is met
2. Set Up Infrastructure
- Install RuPay POS machines
- Display UPI QR codes
- Enable CBDC wallet acceptance
- Ensure all modes are functional
3. Display Payment Options
- Display acceptance of RuPay debit cards
- Display UPI acceptance
- Display UPI QR codes
- Display CBDC wallet acceptance
4. Train Staff
- Train staff on accepting payments through prescribed modes
- Ensure staff can assist customers with digital payments
5. Maintain Records
- Maintain records of digital payments accepted
- Track compliance with the mandate
Consequences of Non-Compliance
Section 452 — Penalty
Section 452 provides that the Assessing Officer may impose a penalty of ₹5,000 for every day of the duration of failure where a person fails to provide a facility for accepting payments through the prescribed electronic modes of payment.
Other Consequences
- Adverse observations in tax audits
- Reputational damage
- Regulatory action
Expert Legal Guidance
Anuj Desai & Associates provides comprehensive legal advisory services on digital payment infrastructure mandates for banks and NBFCs. Our direct tax experts help BFSI entities understand their obligations, set up compliant systems, and navigate the regulatory framework. We assist in applicability assessment, infrastructure setup, and representation before income-tax authorities.
Disclaimer: This article provides general information and does not constitute legal advice. For specific guidance on digital payment mandate compliance or any other direct tax matter, please consult qualified legal professionals.
Need Expert Legal Guidance?
Navigating the digital payment infrastructure mandate framework for banks and NBFCs requires experienced legal counsel. At Anuj Desai & Associates, we provide comprehensive direct tax advisory services, including:
- Applicability Assessment: Evaluation of digital payment mandate obligations
- Infrastructure Setup: Guidance on setting up compliant payment infrastructure
- Penalty Defence: Representation in penalty proceedings
- Compliance Review: Review of digital payment compliance
Contact us for expert legal guidance on your digital payment mandate compliance matters.