Summary of Section 269SS, 269ST & 269T

269SS, 269ST & 269T

Section 269SS, 269ST and 269T 

In India Tax, eversion is one of the serious problem, which is causing economic disparities. Window dressing, false cash transaction give birth to accounted money in turn increase tax eversion. 

The Objectives of Introducing 269SS, 269ST & 269T 

This section was introduced to uncover hidden and unaccounted cash during raids. Previously, the culprit would escape by saying that he received the cash as 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 accumulation of black money, 269SS and 269T were introduced which restricts these cash payments. 

Description of Section 269SS (Acceptance Loan > 20,000) 

In simple words 

If loan, deposite and advances accepted increased Rs.20,000 in cash he need to report in 3CD. 

As per Law 

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. Amount of loan or deposit or specified sum is Rs. 20,000 or more, or 

2. Sum total amount of loan, deposit and the specified sum is Rs. 20,000 or more. For example- Mohit wants to take a loan of Rs.9,000 a deposite of Rs.6,000 and advances of Rs.6,000 from Dilip, He cannot accept it in cash because the total sum is Rs.21,000. 

3. In a case where a person had already received a loan, deposit or specified sum from the depositor (person giving the loan, deposit or specified sum) but the loan or deposit or specified sum hasn’t been paid back in such case, if the unpaid loan or deposit or-specified sum is Rs. 20,000 or more, or 

4. Sum total amount of (1), (2) and (3) is Rs. 20,000 or more. Therefore, in nutshell, a person cannot accept cash loan or deposit of Rs. 20,000 or more from another person. 

But this section is not apply in following case (Exception to Section 269SS) 

1. Any loan or deposit or specified sum “taken or accepted from” or “taken or accepted by” the following entities – 

   a. The Government 

  b. Any banking company, post office savings bank or co-operative bank 

  c. Any corporation established by a Central, State or Provincial Act 

 d. Any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013) 

  e. Any institution, association or body or class of institutions, associations or bodies notified in Official Gazette 

2. A person earning only agriculture income accepts loan or deposite from  another person also earning only agriculture income. 

3. Receiving cash from relative during emergencies. Here intention should not be to evade the taxes 

4. Partners contributing cash capital into partnership firm. 

Description of Section 269ST (Receipt of Sales  > 20,000) 

In Simple Words, 

If a person sales a goods and services of Rs.2,00,000 in cash he/she need to report in 3CD. 

As per Law, 

No person shall receive an amount of Rs. 2.00 Lakhs or more otherwise than by an account payee cheque or account payee bank draft or electronic clearing transfer system through bank accounts. These provisions will be applicable, whether the person is seller or service provider or transfer of capital assets. 

But, this section is not apply in following case (Exception to section 269ST) 

Withdrawal from bank, post offices, c-operative banks according to Notification No. S.O. 1057(E), dated 5th April, 2017; 

CBDT has notified some person, who have exempted from receiving Rs. 2.00 Lakhs from the provisions of Section 269ST of the Income Tax Act, 1961. The CBDT has enlisted following entities; 

1 The receipt by a business correspondence on behalf of a banking company or co-operative bank according to the guidelines of RBI; 

2 Receipt by White Label ATM Operator from retail outlet sources of a banking company or cooperative bank, in accordance with the authorisation of RBI; 

3 Receipt by an agent of an issuer of prepaid payment instruments in accordance with the authorisation of RBI; 

4  Receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards; 

5 Receipt pertaining to any award / reward which is no included in total income under Section 10(17A) 

Note: CBDT has clarified that in case of repayment of loan from persons to Non-Banking Finance Companies/ Housing Finance Companies all instalments paid in cash shall not be aggregated, only single instalments should be considered. Suppose Mr. A is paying his Rs. 10,00,000/- loan from a Non-Banking Finance Company in cash and he has paid Rs. 25,000/- of instalments each month. Then in a year his payment will be Rs. 3.00 Lakhs and which violates provisions of Section 269ST in the hand of NBFC(s). Now in this case single transaction should not be more than Rs. 2.00 Lakhs and not all instalments in a year should be aggregated. [Circular No. 22/2017 dated 3rd July, 2017].  

Description of Section 269T (Repayment loan > 20,000) 

In Simple Words, 

If a person repay loan more than 20,000. 

As per Law, 

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 – 

1.  Amount of loan or deposit, including interest amount, is Rs. 20,000 or more, or 

2. The aggregate amount of loans or deposits, including the interest amount, held by such person in his own name, or jointly with any person, is Rs. 20,000 or more. 

But, this section is not apply in following case (Exception to section 269ST 

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 – 

1. The government, 

2. Any banking company, post office savings bank or co-operative bank, 

3. Any corporation established by a Central, State or Provincial Act, 

4. Any Government company as defined in section 617 of the Companies Act, 1956, 

5. Other notified institutions 

Penalty on contravention of Section 269SS, 269ST & 269T 

100% of the loan or deposit amount will be the penalty leviable by the assessing officer