1275.Whether the payment in cash of periodical interest amount alone exceeding Rs. 10,000 would attract the provisions of section 269T
1. Indian Banks’ Association had sought a clarification as to whether the payment in cash of periodical interest amount along exceeding Rs. 10,000 would attract the provisions of section 269T. This section provides that no company, co-operative society or firm shall repay any deposit otherwise than by an account payee cheque or account payee bank draft where the amount of deposit or the aggregate of the amount of deposit together with any interest is Rs. 10,000 or more.
2. The matter has been examined in consultation with the Ministry of Law. The Board has been advised that the payment of interest of Rs. 10,000 or more, will have to be made in the manner provided in section 269T. So far as the repayment of deposit together with any interest is concerned, there is no room for doubt. If the amount of repayment after including the interest is Rs. 10,000 or more, the provisions of section 269T would be attracted. This is because the interest accrued on the deposit and credited to the account periodically or otherwise partakes of the character of a deposit and as such becomes a deposit itself.
Circular: No. 479 [F. No. 225/47/86-IT(A.II)], dated 16-1-1987.
