Acceptance Or Repayment Of Loan In Cash

People are usually taking loans or deposits to run their business but should take care in acceptance or repayment of loan in cash.Hence many a times loans or deposits are also taken from relatives but one should be careful while taking loans or deposits from relatives as Income Tax department imposes several restrictions for taking loans or deposit.To prevent black money and for proper accounting of income section 269SS and 269T are enacted so that people don’t give false explanation to unaccounted income.

Acceptance or repayment of loan in cash

Provision of 269SS:

No person shall take or accept from any other person , any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account if,

The sum or amount of loan or deposit or specified sum is Rs.20,000 or more even in the case when current outstanding loan or deposit or specified sum is more than Rs.20,000 it is prohibited.

Following are the exemptions of section 269SS:

Any corporation established by the provincial,central or state Goverment,The Goverment,Any banking organisation,post office saving bank,or cooperative bank,any government organization mentioned in section 2 of the companies Act,2013 or any institution,body,association or class of institution mentioned in the official gazette are entities exempted from taking or accepting specified sum,loan or deposit.
Person earning income only from agriculture may take loan,deposit or specified sum from person only having agriculture income.
If cash is received from relative intention should not be of tax evasion.
Contribution of cash capital by partners in partnership.

Penalty:There is 100% penalty of the amount of loan or deposit under section 269SS for its contravention.

Provision of 269T:

No person shall repay any loan or deposit or any specified sum to any person, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account if,

The sum or amount of loan or deposit or specified sum is Rs.20,000 or more including interest even in the case when current outstanding loan or deposit or specified sum is more than Rs.20,000 it is prohibited.

Exemption from section 269T is given if paid to following entities:

Any corporation established by the provincial,central or state Goverment,The Goverment,Any banking organisation,post office saving bank,or cooperative bank,any government organization mentioned in section 2 of the companies Act,2013 or any institution,body,association or class of institution mentioned in the official gazette.

Penalty:There is 100% penalty of the amount of loan or deposit under section 269T for its contravention.

Thus above are Acceptance or repayment of loan in cash.

Owner of this information can be reached at K M GATECHA & CO LLP.

Important note: This does not lead to legal advice or legal opinion and is personal view and for information purpose only. It is prepared on the basis of facts available and applicable law.It is suggested to go through applicable provisions of law,latest regulations,judicial announcements, circulars, notifications and clarifications etc before taking any action based on above content.You agree here by that for any action taken on basis of above information in any manner writer or K M GATECHA & CO LLP is not responsible or liable for any omission,reliability,accuracy,completeness,errors or authenticity.This work by professional is just for knowledge purpose and does not constitute any kind of solicitation of work or advertisement.