Sections 187 and 189 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 187 requires a person carrying on business or profession, whose total sales, turnover or gross receipts exceeded fifty crore rupees in the immediately preceding tax year, to provide facility for accepting payment through prescribed electronic modes. Section 189 defines the terms used in Chapter XII: "banking company", the two agricultural co-operative bodies, "specified sum" and "specified advance". This article reads both as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Every person carrying on business or profession whose total sales, turnover or gross receipts exceed fifty crore rupees during the immediately preceding tax year must provide facility for accepting payment through electronic modes as may be prescribed, in addition to any other electronic modes he already provides. Section 189 defines specified sum and specified advance as money received in relation to transfer of an immovable property, whether or not the transfer takes place.
Scope
Both sections are in Chapter XII, "Mode of payment in certain cases, etc.". The Act came into force on the 1st April, 2026 (section 1(3)), save as otherwise provided. Later amendments, rules and notifications should be checked.
Sections 185, 186 and 188, the neighbours of these two, have their own posts: section 185 (cash loans and deposits), section 186 (cash receipt limit) and section 188 (loan repayment). For where the earlier Act's provisions on these payments sit in the 2025 Act, see our note on where the earlier Act's provisions on cash loans and deposits sit. If your business needs to set up payment modes and keep the books in order, our books of accounts compliance team can help.
Section 187: acceptance of payment through prescribed electronic modes
Section 187 reads, in substance:
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.
The three elements
| Element | What the text says |
|---|---|
| Who | every person who is carrying on business or profession |
| Threshold | total sales, turnover or gross receipts in the business or profession exceed fifty crore rupees during the immediately preceding tax year |
| Duty | provide facility for accepting payment through electronic modes as may be prescribed, in addition to other electronic modes, if any, he already provides |
Points to note
- The threshold is looked at in the preceding tax year. The test is whether the figure "exceeds fifty crore rupees" in the tax year just before. A figure of exactly fifty crore rupees does not exceed it.
- The measure is total sales, turnover or gross receipts in the business or profession. The section sets no further rule about how they are computed.
- The electronic modes are prescribed. The Act itself does not list them. The modes are left to the Income-tax Rules, 2026; see our rule-wise guides. The same Chapter's rules on cash, in sections 185, 186 and 188, refer to "any other prescribed electronic mode" and "any other electronic mode, as may be prescribed".
- "In addition to other electronic modes, if any". A business that already offers some electronic modes must add the prescribed ones; it does not replace the existing ones.
- No consequence is stated in section 187 itself. The Act's text in this section does not say what follows if the facility is not provided. The reader should check other provisions of the Act, and the rules, notifications and later amendments, for any consequence.
Section 189: interpretation
For the purposes of Chapter XII, unless the context otherwise requires:
| Clause | Term | Meaning |
|---|---|---|
| (a) | "banking company" | a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) apply, and includes any bank or banking institution referred to in section 51 of that Act |
| (b) | "primary agricultural credit society" and "primary co-operative agricultural and rural development bank" | the meanings respectively assigned to them in section 150 |
| (c) | "specified sum" | any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place |
| (d) | "specified advance" | any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place |
Reading the definitions
- Banking company. The definition leans on the Banking Regulation Act, 1949, including section 51 of that Act, and the reader should check that Act for what it covers.
- Specified sum and specified advance. The two are close. "Specified sum" is money receivable, as advance or otherwise, and "specified advance" is money in the nature of an advance, by whatever name called. Both are tied to the transfer of an immovable property and both apply "whether or not the transfer takes place". So an advance for a property deal that falls through is still a specified advance.
- Loan or deposit. "Loan or deposit" is defined in sections 185(5) and 188(5), not in section 189.
A cross-reference to check
Clause (b) refers to section 150 for the meanings of the two agricultural credit bodies. In the Act as it now stands, section 150 is the provision on the deduction for a federal co-operative. The meanings of "primary agricultural credit society" and "primary co-operative agricultural and rural development bank" are printed in section 149(6). This looks like a drafting slip in the cross-reference; the text is reproduced as printed. See our article on sections 148 to 150 for the two sections.
Where the defined terms are used
The terms in section 189 are used in the neighbouring sections of Chapter XII:
- Section 185 (taking or accepting a loan, deposit or specified sum) uses "specified sum", "banking company" and the two agricultural bodies.
- Section 188 (repayment of loans, deposits or specified advances) uses "specified advance", "banking company" and the same two bodies.
- Section 186 deals with receipts of two lakh rupees or more and refers back to section 185.
A worked example
Names and amounts are invented; the fifty crore rupee test is as printed.
Garuda Retail Private Limited had total sales, turnover and gross receipts of Rs. 62,00,00,000 in the immediately preceding tax year. It carries on business and already accepts payment by one electronic mode.
- Rs. 62,00,00,000 exceeds fifty crore rupees, so section 187 applies.
- Garuda must provide facility for accepting payment through the electronic modes as may be prescribed, in addition to the mode it already offers.
Now take Chandra Textiles, whose receipts were exactly Rs. 50,00,00,000 in the preceding tax year. That figure does not "exceed" fifty crore rupees, so section 187 does not apply for the current year.
Separately, Meghna Developers receives Rs. 5,00,000 from a buyer for a flat, and the sale later falls through. The Rs. 5,00,000 is a "specified advance" (and a "specified sum") under section 189 because it relates to a transfer of immovable property "whether or not the transfer takes place".
Need help with payment-mode compliance?
A growing business needs to know when it crosses the section 187 threshold and how receipts and repayments are recorded. Our books of accounts compliance service can help you track turnover and keep your payment records in order.
Key takeaways
- Section 187 applies to a person carrying on business or profession whose total sales, turnover or gross receipts exceed fifty crore rupees in the immediately preceding tax year.
- The duty is to provide facility for the prescribed electronic modes, in addition to those already provided.
- The modes are not listed in the Act; they are left to the rules.
- Section 189 defines "specified sum" and "specified advance" by reference to transfer of immovable property, whether or not the transfer takes place.
- Clause (b) of section 189 points to section 150 for two definitions that are printed in section 149(6).
Read next
- Section 185: loans and deposits taken or accepted in cash
- Section 186: cash receipt limit
- Section 188: repayment of loans and deposits
- Sections 190 to 193: tax on certain special income
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.