Home / Income-tax Act 2025 / Section 187

Section 187 Income Tax Act 2025: Who Must Offer Digital Payment Facilities?

Businesses and professionals with sales, turnover or gross receipts exceeding Rs. 50 crore in the immediately preceding tax year must provide facilities for accepting payment through prescribed electronic modes. Section 187 imposes an obligation to offer these facilities, even where other electronic payment options already exist.

Legal position: Section 187 forms part of Chapter XII of the Income-tax Act, 2025, effective from 1 April 2026. It broadly corresponds to Section 269SU of the Income-tax Act, 1961. The statutory threshold is more than Rs. 50 crore, not Rs. 50 crore or more.

What does Section 187 require?

Section 187 requires a person carrying on business or profession to provide a facility for accepting payments through such electronic modes as may be prescribed when the total sales, turnover or gross receipts of that business or profession exceeded Rs. 50 crore during the immediately preceding tax year.

The prescribed facilities must be offered in addition to any other electronic modes already made available. The provision concerns the ability to accept payments; it does not itself require every customer to pay electronically.

Who must comply with Section 187?

  • The person carries on a business or profession.
  • Total sales, turnover or gross receipts in that business or profession exceeded Rs. 50 crore in the immediately preceding tax year.
  • Both conditions must be satisfied. The previous tax year's figures, rather than the amount of an individual receipt, determine the threshold.
Example: If the immediately preceding tax year's turnover was Rs. 52 crore, the obligation generally applies. If it was exactly Rs. 50 crore, the statutory condition of exceeding Rs. 50 crore is not met.

What electronic payment facilities must be provided?

Section 187 refers to prescribed electronic modes; the Act does not itself list every applicable payment instrument. Under the corresponding earlier regime, prescribed facilities included RuPay debit cards, BHIM-UPI and BHIM-UPI QR Code, subject to the applicable rules and notifications. The precise modes required for a relevant tax year must be checked against the rules and notifications in force under the 2025 Act.

Merely offering a card machine or a payment gateway is not necessarily sufficient if the prescribed modes are unavailable. Businesses should confirm that their payment service providers enable the required methods and keep evidence that the facilities operate.

Relevant statutory terms

Person: The statutory expression includes categories of taxpayers recognised under the Act, such as individuals, companies, firms and other covered entities; the precise scope is governed by the Act's definition of person.
Business or profession: The obligation applies to persons carrying on business or professional activities, as described in Section 187(a).
Total sales, turnover or gross receipts: These are the measures specified in Section 187(b) for testing the preceding-year Rs. 50 crore threshold. Their application depends on the relevant business or profession and applicable accounting and tax rules.
Prescribed: A requirement determined by the applicable rules or notifications under the Income-tax framework, rather than a payment mode selected solely at the business's discretion.
Immediately preceding tax year: The tax year immediately before the tax year for which Section 187 compliance is being assessed.

What is the penalty for failing to provide digital payment facilities?

Section 452 of the Income-tax Act, 2025 provides that the Assessing Officer may impose a penalty of Rs. 5,000 for every day during which a person fails to provide the facility for accepting payments through the prescribed electronic modes referred to in Section 187.

For example, a failure lasting ten days may expose the person to a penalty of Rs. 50,000, subject to the statutory procedure and applicable provisions. Businesses should address missing or malfunctioning facilities promptly and preserve records of rectification.

Practical illustrations

Example 1: Turnover above the threshold

A company with preceding-year turnover of Rs. 75 crore accepts payments through a conventional bank transfer but does not provide a prescribed electronic payment facility. It must arrange the prescribed facilities; a general bank-transfer option alone does not automatically establish compliance.

Example 2: Turnover exactly Rs. 50 crore

A professional practice reports gross receipts of exactly Rs. 50 crore in the preceding tax year. On that figure alone, Section 187's condition of receipts exceeding Rs. 50 crore is not satisfied.

Example 3: Several payment methods already offered

A retailer accepts credit cards and online bank transfers. If it crosses the threshold, it should still verify whether all payment facilities prescribed for Section 187 are offered in addition to its existing options.

Frequently asked questions

Does Section 187 prohibit cash payments?

No. Section 187 requires qualifying persons to provide prescribed electronic acceptance facilities. Separate cash-receipt restrictions are contained in Section 186.

Is the threshold Rs. 50 crore or Rs. 50 crore and above?

The statutory language is exceeds Rs. 50 crore. Accordingly, a figure exactly equal to Rs. 50 crore does not meet that condition.

Does having UPI alone guarantee compliance?

Not necessarily. The facilities must match the electronic modes prescribed under the applicable rules. The precise requirements should be verified for the relevant period.

Which provision imposes the penalty?

Section 452 provides for a possible penalty of Rs. 5,000 per day of failure.

What was the corresponding provision in the 1961 Act?

Section 269SU of the Income-tax Act, 1961 dealt with acceptance of payment through prescribed electronic modes.

Official statutory references

Official Income-tax Act 2025 (amended)Income Tax e-Filing Portal

Updated: 10 November 2026. This article provides general statutory information; verify rules, notifications and the relevant facts before relying on it for compliance.