Provisions relating to giving and accepting of loans

Provisions relating to giving and accepting of loans

Provisions relating to giving and accepting of loans

Section 269SS and section 269T is like a small anti black money step taken by the government of India. Capital is the important part of every business. Our own capital may not be sufficient to run of business therefore loans and deposits become necessary however one has to keep in mind the income tax provisions while accepting or giving loans. Such provisions regulating acceptance of loans or repayment of loans are contained under section 269SS and 269T of income tax act 1961.

Section 269SS

As per section 269SS of income tax act 1961 any loan or deposit shall not be taken or accepted from any other person other than by account payee cheque or account payee bank draft if

1. The amount of such loan or aggregate amount of such loans or deposits

2. Any loan or deposits accepted earlier is remaining unpaid on the date of accepting fresh loan the aggregate amount remaining unpaid

3. The total amount of 1 and 2 above

Is equal to Rs 20,000 or more. Thus no person shall accept any amount as loan or deposits which is equal to or more than 20000 otherwise than by way of account payee check or account payee bank draft.

List of Persons to whom section 269SS not applicable

The following persons are exempted from the preview of section 269SS

a) Government

b) Any corporation established by central or state provisional act

c) Any banking company, co operative bank or post office bank

d) Other notified institutions

e) Where the depositor and acceptor having agricultural income and neither of them having any taxable income.

Consequences if failed to comply with section 269SS

As per section 271D of income tax act state that if any loan or deposit accepted in contravention with the section 269SS then a penalty equivalent to amount of such loan or deposit shall be imposed. No penalty shall be imposed if their reasonable cause.

Section 269T

As per section 269T of income tax act 1961 any branch of banking company or a firm or a co operative society or any other person shall not repay any loan or deposit otherwise than by account payee cheque or account payee bank draft if

1. The amount of Loan or deposit with interest is twenty thousand or more

2. The aggregate amount of loans held by such person on date of repayment together with interest is twenty thousand or more

List of Persons to who section 269T not applicable

The following persons are exempted from the preview of section 269T

Government

Any corporation established by central or state provisional act

Any banking company, co operative bank or post office bank

Other notified institutions

Consequences if failed to comply with section 269T

As per section 271E of income tax act state that if any loan or deposit repaid in contravention with the section 269SS then a penalty equivalent to amount of such loan or deposit shall be imposed. No penalty shall be imposed if their reasonable cause.