Chapter XII - Mode of Payment in Certain Cases, etc.
Section 187
Section 187: acceptance of payment through prescribed electronic modes
Section 187 requires larger businesses and professionals to give their customers a way to pay electronically - specifically, anyone carrying on business or a profession whose sales, turnover or gross receipts exceeded ₹50 crore in the immediately preceding tax year must provide a facility to accept payment through the prescribed electronic modes.
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Need advice on Section 187?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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— (a) such person is carrying on business or profession; and (b) total sales, turnover or gross receipts in such business or profession exceeds fifty crore rupees during the immediately preceding tax year.
Introduction
The requirement applies only if both conditions are met: the person carries on a business or profession, and its sales, turnover or gross receipts exceeded fifty crore rupees in the immediately preceding tax year. The prescribed electronic payment facility is additional to any other electronic modes already provided.
Key takeaways
Two eligibility conditions
Business or profession activity and the preceding-year receipts threshold must both be met.
Additional mode
The prescribed mode is provided in addition to other electronic modes, if any.
Who must provide the facility
Every person carrying on business or profession must provide a facility for accepting payment through the electronic modes prescribed (in addition to any other electronic modes already offered), if the total sales, turnover or gross receipts in that business or profession exceeded ₹50 crore during the immediately preceding tax year.
When this provision applies
Use the immediately preceding tax year’s total sales, turnover or gross receipts in the business or profession. The test is whether that amount exceeds ₹50 crore, not the current year’s expected profit or the value of one payment.
Identify the modes actually prescribed for this duty and record that the acceptance facility is available. The section requires those modes in addition to any other electronic modes already provided, so an existing option should be checked against the prescription.
Limits and procedural safeguards
Section 187 requires a payment-acceptance facility; it should not be paraphrased as a command in this section that every receipt must occur electronically. Separate restrictions on the mode of particular transactions require their own analysis.
The section does not itself list the prescribed technologies, set a transaction fee or state the penalty. Section 452 separately deals with failure to provide the required facility, while Section 470 addresses proved reasonable cause for that penalty.
Step-by-step review
1. Confirm the person carries on business or profession and identify the immediately preceding tax year.
2. Reconcile total sales, turnover or gross receipts and apply the strictly-exceeds ₹50 crore test.
3. Check the current prescribed modes and arrange and verify the required acceptance facility.
4. Retain activation and availability evidence and review the preceding-year threshold again for the next tax year.
Hypothetical example
Hypothetical illustration: a business has relevant preceding-tax-year turnover of ₹50 crore exactly. That amount does not exceed the statutory threshold. If the relevant turnover is ₹50.01 crore, the threshold condition is met, subject to the other condition that the person carries on business or profession; the prescribed modes must then be identified.
Records to prepare
Preceding-tax-year sales, turnover or gross-receipt reconciliation.
The applicable official prescription identifying the required modes.
Activation, customer availability and any interruption or restoration records.
Official amended Act source
Step-by-step flow for applying Section 187
- 1
Does the person carry on a business or profession?
- No: Section 187 does not apply.
- Yes: Go to the next step.
- 2
What were the total sales, turnover or gross receipts in the immediately preceding tax year?
- ₹50 crore or less: Section 187 does not apply for the current tax year.
- More than ₹50 crore: Go to the next step.
- 3
Which electronic modes are prescribed?
The Act leaves the specific modes to be prescribed. Check the current prescription.
- 4
Provide the facility
Offer the prescribed modes to customers, in addition to any other electronic modes already offered, and keep evidence that the facility is available.
Practical checklist
Do
- Check whether the business exceeds the turnover threshold in section 187.
- Identify the electronic modes prescribed for section 187, provide the required facility, and retain evidence that customers can use it.
- Recheck the immediately preceding tax year's sales, turnover or gross receipts for each tax year; the threshold test is tied to that prior period.
- Preceding-tax-year sales, turnover or gross-receipt reconciliation.
- The applicable official prescription identifying the required modes.
- Activation, customer availability and any interruption or restoration records.
Avoid
- Assume that offering just one electronic option satisfies the prescribed modes without checking the applicable rule.
Illustrative example
Worked example: crossing the ₹50 crore line
Hypothetical facts (illustration only, not a real taxpayer): A distributor's turnover was ₹48 crore in tax year 1 and ₹52 crore in tax year 2.
Tax year 2
The immediately preceding tax year is tax year 1, with turnover of ₹48 crore. That does not exceed ₹50 crore, so Section 187 does not apply in tax year 2.
Tax year 3
The immediately preceding tax year is tax year 2, with turnover of ₹52 crore. That exceeds ₹50 crore, so the distributor must provide the facility in tax year 3.
Existing modes
If the distributor already accepts some other electronic payments, it must still provide the prescribed modes in addition to them.
Outcome
- The test looks back one tax year, so the duty starts the year after turnover crosses ₹50 crore.
- Re-check the preceding year's turnover every year.
Glossary
- Acceptance facility
- The arrangement enabling payments to be received through the prescribed modes.
- Preceding tax year
- The tax year immediately before the one for which the facility obligation is being considered.
Frequently asked questions
Is turnover of exactly ₹50 crore enough?
No. Section 187 uses “exceeds fifty crore rupees” for the immediately preceding tax year.
What turnover threshold triggers the Section 187 requirement?
Total sales, turnover or gross receipts of the business or profession exceeding ₹50 crore in the immediately preceding tax year.
Does Section 187 replace other electronic payment modes already offered?
No - it requires the prescribed electronic modes to be offered in addition to any other electronic modes already being provided by that person.
Does this section alone require every receipt to be electronic?
It requires provision of the prescribed acceptance facility. Restrictions on the mode of individual transactions must be analysed under the relevant separate provisions.
Is current-year profit the basis of the ₹50 crore test?
No. The test uses sales, turnover or gross receipts in the business or profession during the immediately preceding tax year.
Need help applying this provision to your situation?
Check your electronic payment compliance with our tax teamLast updated 10 October 2026