The Direct Tax Code (DTC) 2025 recognises a comprehensive range of electronic modes of payment for various compliance purposes. Understanding these recognised modes is essential for businesses, professionals, and individuals to ensure compliance with payment-related provisions. This guide provides a complete list and analysis of all electronic modes of payment recognised under the DTC.
The Statutory Framework
Section 66(32) — Definition of Specified Banking or Online Mode
Section 66(32) of the DTC defines "Specified Banking or Online Mode" as transaction 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.
Rule 48 — Other Electronic Modes
Rule 48 of the Income-tax Rules, 2026 prescribes the other electronic modes of payment recognised under the DTC.
Complete List of Recognised Electronic Modes
1. Credit Card
Credit cards issued by banks and financial institutions are recognised as electronic modes of payment. Payments made through credit cards are considered valid electronic payments for all compliance purposes.
Key Features:
- Widely accepted at merchant establishments
- Provides credit facility to cardholders
- Detailed transaction records available
2. Debit Card
Debit cards, including those powered by RuPay, Visa, and Mastercard, are recognised as electronic modes of payment.
Key Features:
- Direct debit from bank account
- Widely accepted at merchant establishments
- RuPay debit cards are specifically mandated for businesses exceeding ₹50 crore turnover
3. Net Banking
Net banking (also known as internet banking) allows customers to make payments directly from their bank accounts through the bank's online portal.
Key Features:
- Direct transfer from bank account
- Available 24/7
- High transaction limits
- Secure authentication
4. IMPS (Immediate Payment Service)
IMPS is an instant interbank electronic fund transfer service that operates 24/7, including holidays.
Key Features:
- Real-time transfer
- Available 24/7
- Immediate confirmation
- Lower transaction limits compared to RTGS
5. UPI (Unified Payment Interface)
UPI is a real-time payment system that enables customers to transfer funds between bank accounts using a mobile platform.
Key Features:
- Instant transfer
- Mobile-based
- No need for bank details
- BHIM-UPI and UPI QR Code are specifically mandated for businesses exceeding ₹50 crore turnover
6. RTGS (Real Time Gross Settlement)
RTGS is a real-time gross settlement system for high-value transactions.
Key Features:
- Real-time settlement
- High-value transactions
- Minimum amount: ₹2 lakh
- Available during banking hours
7. NEFT (National Electronic Funds Transfer)
NEFT is a nationwide payment system facilitating one-to-one funds transfer.
Key Features:
- Pan-India coverage
- Available in batches
- No minimum amount
- Available during banking hours
8. BHIM (Bharat Interface for Money) Aadhaar Pay
BHIM Aadhaar Pay allows merchants to accept payments from customers using their Aadhaar number and biometric authentication.
Key Features:
- Aadhaar-based authentication
- No card or mobile required for customer
- Biometric verification
9. Tier-III: Full KYC Central Bank Digital Currency Wallets
Central Bank Digital Currency (CBDC) wallets with full KYC are recognised as electronic modes of payment.
Key Features:
- Digital representation of fiat currency
- Issued by the Central Bank
- Full KYC compliance
10. P-CBDC, Wholesale/Cross-border CBDC
P-CBDC (retail CBDC) and wholesale/cross-border CBDC are also recognised as electronic modes of payment.
Key Features:
- Retail CBDC for general public use
- Wholesale CBDC for interbank transactions
- Cross-border CBDC for international transactions
Application of Recognised Modes
Section 185 — Mode of Taking or Accepting Loans and Deposits
Under Section 185, no person shall take or accept from another person any loan or deposit or specified sum except through:
- An account payee cheque; or
- Account payee bank draft; or
- Electronic clearing system through a bank account; or
- Any other prescribed electronic mode (as listed above)
if the amount or aggregate amount is ₹20,000 or more.
Section 186 — Mode of Undertaking Transactions
Under Section 186, no person shall receive an amount of ₹2,00,000 or more except through:
- An account payee cheque; or
- Account payee bank draft; or
- Electronic clearing system through a bank account; or
- Any other electronic mode as may be prescribed
Section 188 — Mode of Repayment
Under Section 188, no branch of a banking company or co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit or specified advance except through:
- 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
- Use of electronic clearing system through a bank account, or any other prescribed electronic mode
Section 36(4) and (5) — Disallowance of Cash Payments
Under Section 36(4) and (5), where any payment or aggregate of payments made in a day to a person exceeds ₹10,000 and is not made through specified banking or online mode, the expenditure by way of such payments shall not be allowed as a deduction.
Schedule VIII (Table: Sl. No. 1.D(d)) — Political Party Contributions
Political parties must receive donations exceeding ₹2,000 through account payee cheque, account payee bank draft, electronic clearing system, or any other prescribed electronic mode.
Compliance Implications
For Businesses
Businesses must:
- Ensure that all payments exceeding prescribed limits are made through recognised electronic modes
- Maintain records of electronic payments
- Ensure that payment infrastructure supports recognised electronic modes
For Professionals
Professionals must:
- Accept payments through recognised electronic modes
- Ensure that receipts exceeding prescribed limits are through recognised electronic modes
- Maintain proper records
For Individuals
Individuals should:
- Make payments through recognised electronic modes where required
- Maintain records of payments
- Be aware of the consequences of non-compliance
Consequences of Non-Compliance
Disallowance of Expenditure
Failure to make payments through recognised electronic modes may result in disallowance of expenditure under Section 36(4) and (5).
Penalty
Failure to comply with payment mode requirements may result in penalties under Sections 450, 451, and 453.
Expert Legal Guidance
Anuj Desai & Associates provides comprehensive legal advisory services on electronic payment compliance. Our direct tax experts help businesses and individuals understand the recognised electronic modes, ensure compliance with payment-related provisions, and navigate the regulatory framework. We assist in assessing compliance, implementing payment systems, and responding to regulatory inquiries.
Disclaimer: This article provides general information and does not constitute legal advice. For specific guidance on electronic payment compliance or any other direct tax matter, please consult qualified legal professionals.
Need Expert Legal Guidance?
Navigating the electronic payment framework requires experienced legal counsel. At Anuj Desai & Associates, we provide comprehensive direct tax advisory services, including:
- Compliance Assessment: Evaluation of payment mode compliance
- System Implementation: Guidance on implementing compliant payment systems
- Penalty Defence: Representation in penalty proceedings
- Record Keeping: Assistance with maintaining proper records
Contact us for expert legal guidance on your electronic payment compliance matters.