Sections 269SS and 269T have been discussed in this article and this deals with cash payment and repayment of loans and deposits. Both the sections were introduced to curb the black money. Tax evasion is one of the serious problems in India causing economic disparities. False cash transactions give birth to unaccounted money which in turn increases tax evasion.
Income Tax Authorities uncover hidden and unaccounted cash
during raids. Previously, the culprit would escape by saying that he received
the cash as a loan or deposit from friends or relatives. Also, the persons
with an aim of tax evasion would do false transactions showing payment and
repayment of loans and deposits in cash.
To curb the increasing cash transactions which are leading to the accumulation
of black money, 269SS and 269T were introduced which restricts these cash
payments.
A person cannot accept loan or deposit or any other specified sum (specified sum here refers to an advance or otherwise, in relation to the transfer of any immovable property) from another person otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if –
1. Any loan or deposit or specified sum “taken or accepted from” or “taken or accepted by” the following entities –
Thus, if any person accepts any loan or deposit or specified sum from the above-mentioned entities, or the entities accept any loan or deposit or specified sum from any person, provisions of 269SS will not apply.
2. A person earning only agriculture income accepts a loan or deposit from another person also earning only agriculture income
3. Receiving cash from relatives during emergencies. Here intention should not be to evade the taxes.
4. Partners contributing cash capital into a partnership firm
100% of the loan or deposit amount will be the quantum of penalty that can be levied by the assessing officer.
Section 269T prohibits any person to repay the loan or deposit or specified sum otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, if –
In nutshell, a person cannot repay the loan or deposit in cash, if the amount is Rs. 20,000 or more.
A person paying Rs. 20,000 or more towards repayment of loan or deposit does not have to comply with 269T if he pays to the following parties –
100% of the loan or deposit amount will be the penalty leviable by the assessing officer.
In clause 31 of Form 3CD, the tax auditor has to report the
transactions that have been hit by the provisions of Sections 269SS and 269T .
Both the parties (payer and receiver) have to report the transactions. Clause
31 of Form 3CD is where these need to be reported.
Frequently Asked Questions
No, this will be a contravention of section 269T i.e. a person cannot repay a loan amounting to more than Rs.20,000 in cash.
Yes, you can accept a cash loan or deposit amount of Rs. 20,000 or more from the government or banking institution because it falls under exceptions of section 269SS.
In clause 31 of Form 3CD, the tax auditor has to report the transactions that have been hit by the provisions of Sections 269SS and 269T . Both the parties (payer and receiver) have to report the transactions. Clause 31 of Form 3CD is where these need to be reported.