No Loan or Deposits or advances in cash >Rs 20000 -Section 269SS

By | May 21, 2016

No to taking/Acceptance of Loan or Deposits or advances in cash Exceeding Rs 20000  : Section 269SS of Income Tax Act

In order to curb generation of black money by way of dealings in cash in immovable property transactions, Finance Act 2015 Provides that there should be no taking/Acceptance of Loan or Deposits or advances in cash Exceeding Rs 20000.

Loan or Deposits or advances

Salient Features of Section 269SS of Income Tax act relating to taking of Loan or Deposits or Advances in Cash > Rs 20000 w.e.f 01.6.2015

  • Provision  applies to  advance in relation to transfer of an immovable property.
  • Section 269SS does not define immovable property. Thus Provisions also applies for rural agricultural land except where both parties involved are having agricultural income and neither of them has any income chargeable to tax under income tax act.
  • No person shall take or accept from any other person
    • any Loan or
    • Deposit or
    •  any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place (called specified sum)

 Otherwise than by

i) by account payee cheque or

ii) by account payee bank draft or

ii) by use of electronic clearing system through a bank account.

                    if

a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum is Rs 20000 or more ;  or

b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid is Rs 20000 or more  ; or

c) the amount or the aggregate amount referred to in (a) together with the amount or the aggregate amount referred to in (b) is Rs 20000 or more:

Example :-Suppose seller of immovable property accepted Rs. 1,00,000 cash advance on 31-5-2015, there is no violation of the section. Suppose he accepts an instalment of Rs. 18,000 by cash on say 04-06-2015 from the buyer. Then, the limit of Rs. 20,000 is reached and section is violated since Rs. 1,00,000 will have to be aggregated with Rs. 18,000 by virtue of clause (b) of section 269SS.

  • The  Loan or Deposits or Specified sum exceeding Rs 20000 in cash can be taken from the following as the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by
    • the Government;
    • any banking company, post office savings bank or co-operative bank
    • any corporation established by a Central, State or Provincial Act;
    • any Government company as defined in clause (45) of section 2 of the Companies Act, 2013
    • such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette:
  • The Loan or Deposits or Specified sum exceeding Rs 20000 in cash can be taken where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act.
  • section 271D  penalty for failure to comply with the amended provisions of section 269SS.

Section 269SS of Income Tax Act as Substituted by the Finance Act, 2015, w.e.f. 1-6-2015 relating to Loan or Deposits or advances :-

Mode of taking or accepting certain loans, deposits and specified sum.

269SS. No person shall take or accept from any other person (herein referred to as the depositor), 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,—

(a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or
(b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b),

is twenty thousand rupees or more:

Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by,—

(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) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette:

Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act.

Explanation.—For the purposes of this section,—

(i)  “banking company” means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act;
(ii) “co-operative bank” shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ;
(iii) “loan or deposit” means loan or deposit of money;
(iv) “specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. ]

Circular No. 19/2015, dated 27-11-2015 on taking/Acceptance of Loan or Deposits or advances in cash Exceeding Rs 20000

(EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT, 2015 )

Mode of taking or accepting certain loans, deposits and specified sums and mode of repayment of loans or deposits and specified advances

54.1 Provisions contained in section 269SS of the Income-tax Act, before amendment by the Act, provided that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is twenty thousand rupees or more. However, certain exceptions were provided in the section.

54.2 Similarly, the provisions contained in section 269T of the Income-tax Act, before amendment by the Act, provided that any loan or deposit shall not be repaid, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, by the persons specified in the section if the amount of loan or deposit is twenty thousand rupees or more.

54.3 In order to curb generation of black money by way of dealings in cash in immovable property transactions, section 269SS of the Income-tax Act has been amended to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property(specified sum) otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more.

54.4 Section 269T of the Income-tax Act has also been amended to provide that no person shall repay any loan or deposit made with it or any specified advance received by it, otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount or aggregate amount of loans or deposits or specified advances is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place.

54.5 Consequential amendments in section 271D and section 271E, to provide penalty for failure to comply with the amended provisions of section 269SS and 269T, respectively, have also been made.

54.6 Applicability – These amendments have taken effect from 1st day of June, 2015.

Memorandum of Finance Bill 2015 relating to taking/Acceptance of Loan or Deposits or advances in cash Exceeding Rs 20000

[Clauses 66, 67, 69 & 70]

Mode of taking or accepting certain loans, deposits and specified sums and mode of
repayment of loans or deposits and specified advances

The existing provisions contained in section 269SS of the Income-tax Act provide that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is twenty thousand rupees or more. However, certain exceptions have been provided in the section. Similarly, the existing provisions contained in section 269T of the Income-tax Act provide that any loan or deposit shall not be repaid, otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, by the persons specified in the section if the amount of loan or deposit is twenty thousand rupees or more.

In order to curb generation of black money by way of dealings in cash in immovable property transactions it is proposed to amend section 269SS, of the Income-tax Act so as to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more.

It is also proposed to amend section 269T of the Income-tax Act so as to provide that no person shall repay any loan or deposit made with it or any specified advance received by it, otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount or aggregate amount of loans or deposits or specified advances is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature
of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place.

It is further proposed to make consequential amendments in section 271D and section 271E to provide penalty for failure to comply with the amended provisions of section 269SS and 269T, respectively.

These amendments will take effect from 1st day of June, 2015.

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