Consequences of Cash Loan / Deposits / Advances & Their Repayments

Cash Loan / Deposits / Advances

INCLUSIONS:

1) Section 269SS read with Section 271D of Income Tax Act, 1961

2) Section 269T read with Section 271E of Income Tax Act, 1961

3) Section 269ST read with Section 271DA of Income Tax Act, 1961

4) Section 269SU read with Section 271DB of Income Tax Act, 1961 (Added by Finance Act, 2019 w.e.f. 1/11/2019)

5) Important Notes

Analysis of the above Section is as below:-

1) Section 269SS read with Section 271D of Income Tax Act, 1961

Section 269SS basically is about Mode of taking/accepting loans or deposits or advance. It tells as follows: 

No person should take/accept:-

a) Loan or Deposit

b) Advance in relation to immovable property

OTHER THAN BY Account Payee Cheque, Demand Draft, Online transfer through bank or any other mode as may be prescribed, if the amount is ≥ Rs. 20000. 

Exception:- Above Section is not applicable if the loan/advance/deposit is taken FROM or BY (i.e. Exemption of Section 269SS)

  1. Govt
  2. Bank, Co-op Bank, Post Office
  3. Govt. Company
  4. A person having only agriculture income
  5. Corporation established by Central, State, Provincial Act
  6. Any other as notified by CBDT

Section 271D: Penalty on Dispute

If the conditions mentioned in Section 269SS is not complied with then a Penalty shall be levied 100% of such loan/deposit/advance.

2) Section 269T read with Section 271E of Income Tax Act, 1961 i.e. Repayment of loans or deposit or advance 

No person should repay:-

a) Loan or Deposit (together with interest)

b) Advance in relation to immovable property

OTHER THAN BY Account Payee Cheque, Demand Draft, Online transfer through bank, or any other mode as may be prescribed, if the amount is ≥ Rs. 20000. 

Exception:- Above Section is not applicable if the loan/advance/deposit is taken from or by (i.e. Exemption of Section 269T)

  1. Govt
  2. Bank, Co op Bank, Post Office
  3. Govt. Company
  4. Corporation established by Central, State, Provincial Act

Section 271E : Penalty on Dispute

If the conditions mentioned in Section 269T is not complied with then a Penalty shall be levied 100% of such loan/deposit/advance repayment.

3) Section 269ST read with Section 271DA of Income Tax Act, 1961 (i.e. Mode of Undertaking Transactions)

Any person should not receive an amount of Rs. 2,00,000 or more except by Account Payee Cheque, Demand Draft, Online transfer through bank or any other mode as may be prescribed;

a). in aggregate from a person in a day or

b). in respect of a single transaction or

c). in respect of a transaction relating to one event or occasion from a person

Exception:- Exemption of Section 269ST

  1. Any receipt by Govt, Any Banking Company, Post Office saving bank, or Co-operative bank
  2. Transaction of nature referred  to in Section 269SS

CG has specified that the provision of Section 269ST shall not apply to the followings:- (Notification No. 28/2017 and 57/2017)

  1. Receipt (cash withdrawal) by any person from bank, Post Office saving bank or Co-operative bank
  2. Receipt by a business correspondent on behalf of a banking company or co-operative bank, in accordance with the guideline issued by RBI
  3. Receipt by white label automated teller machine operator from retail outlet sources on behalf of a banking company or Co-operative bank
  4. Receipt from an agent by an issuer of prepaid payment instruments
  5. Receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit card
  6. Receipt which is not includible in the total income under Section 10(17A) i.e. award form Govt etc.

Section 271DA : Penalty on Dispute

Penalty shall be levied 100% of such receipt.

However, no penalty shall be levied if that person proves that there were good and sufficient reasons for the contravention.

4) Section 269SU read with Section 271DB of Income Tax Act, 1961 (Added by Finance Act, 2019 w.e.f. 1/11/2019)

Section 269SU tells about the Acceptance of payment through prescribed electronic modes.

Every person who is carrying on business shall provide the facility for accepting payments through prescribed electronic modes. These prescribed modes will be in addition to the facility for any other electronic mode of payment already provided to customers by such person.

Applicability of Section 269SU:-

Section 269SU is applicable to a person when the total sales, turnover or gross receipts from business exceeds Rs 50 crore during the immediately preceding previous year.

Section 271DA : Penalty on non – compliance

Penalty a sum of Rs. 5000 for every day during which such failure continues.

5) Important Notes:-

1. For Section 269SS:  On the date of taking or accepting such a loan or deposit or advance in relation to immovable property, any loan or deposit or advance immovable property taken or accepted by such person and unpaid on such date shall also be considered for Rs. 20000 limits.

2. For Section 269ST: The CBDT clarified that in respect of receipt in the nature of repayment of loan by NBFCs or Housing Finance Companies, the receipt of one installment of loan repayment in respect of  a loan shall constitute a “single transaction”  and all the installments paid for a loan shall not be aggregated for the purpose of determining the applicability of the provision of Section 269ST.

3. For Section 269SU: The Central Board of Direct Taxes (CBDT) has notified the prescribed modes of payment for the purpose of section 269SU:-

a. Debit Card powered by RuPay
b. Unified Payments Interface (UPI) (BHIM-UPI)
c. Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

4. For All Sections:  Penalty shall be imposed by Joint Commissioner.

5. Any other mode as may be prescribed:-

a) Credit Card

b) Debit Card

c) Net Banking

d) IMPS

e) UPI

f) RTGS

g) NEFT

h) BHIM

 

Thanks & Regards

Deepesh Goyal
Contact: 8168782293

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