Section 269SS & 269T
Objective:
Sections 269SS and 269T are covered under the Income-tax Act. Tax evasion is one of the major issues faced in India due to which major losses have to be incurred by the government. Cash transactions which are done with the wrong intention which is uncounted become one of the ways of tax evasion. So the government introduced section 269SS & 269T to curb the black money and these sections deal with cash payment and repayment of loans and deposits.
About 269SS:
A person cannot accept any loan or deposit or any other sum (here other sum refers to an advance, concerning the transfer of any immovable property) from another person through the mode other than by an account payee cheque or account payee bank draft or use of ECS (Electronic Clearing System) through a bank account if the amount of loan or deposit whether individually or in total isRs. 20,000 or more.
In a case where a person had already received a loan or deposit from the depositor but the loan or deposit sum hasn’t been paid back in such a case, if the unpaid loan or deposit is Rs. 20,000 or more, In short, a person cannot accept cash loan or deposit of Rs. 20,000 or more from another person.
Exceptions to 269SS:
If any person accepts any loan or deposit from the entities mentioned in the list given below, or the entities accept any loan or deposit or specified sum from any person, provisions of 269SS will not apply. The list of such entities are as follows:
- Any loan or deposit is taken or accepted from or by the following entities –
- The transactions are done with the government
- Any transaction is done between a banking company, post office savings bank.
- Any corporation established by a Central or State.
- Any institution, association or body or class of institutions, associations or bodies notified in the Official Gazette.
- Where the earnings of a person are only from agriculture income and he accepts loan or deposit from another person who is also earning from agricultural income.
- When you receive any cash in the case of emergency from your relatives.
- If in a partnership firm partners are contributing cash as capital.
About 269T:
This section prohibits any person to repay the loan or deposit by the way other than an account payee cheque or account payee bank draft or by use of ECS (Electronic Clearing System) through a bank account means you can not pay the amount in cash, if –
a. The amount of loan or deposit, including the amount of interest on it, is Rs. 20,000 or more.
b. The aggregate amount of loans or deposits, including the amount of interest on it, held by such person in his name, or jointly with any other person, is Rs. 20,000 or more.
Exceptions to 269T
A person who is paying Rs. 20,000 or more towards repayment of loan or deposit does not have to comply with 269T if he pays to the parties which are as follows:
- The transactions are done with the government.
- Any banking company, post office, or savings bank.
- Any corporation established by a Central or State.
If you don’t follow this two-section then a penalty of 100% of the loan or deposit amount will be the penalty leviable by the assessing officer.
