Arjun (Fictional Character): Krishna, What is The Banning of Unregulated Deposit Scheme Ordinance 2019? From when is it applicable? Many fake news are circulated related to this ordinance.

Krishna (Fictional Character): Arjun, Unregulated Deposits Scheme Ordinance is an Ordinance to ban unregulated deposits as well as to protect the interest of Depositors. This ordinance was introduced on 21-Feb-2019. Everyone needs to study this ordinance of deposit and protect himself rather than believing on fake news.

Arjun (Fictional Character): Krishna, to whom is this Ordinance Applicable?

Krishna (Fictional Character): Arjun, this Ordinance is applicable to all deposit takers who by way of business taking specified deposits and not under Regulated Deposit Scheme. Further,

1. Unregulated deposit scheme means such kind of scheme wherein deposits are taken other than regulated deposits from those conducting business of deposits.

2. Deposit here means an amount received by way of an advance or loan or in any other form, by any deposit taker with a promise to return after a specified period or otherwise, either in cash or kind, with or without benefit in the form of interest, bonus, profit, or in any other form. Refer definition for more details.

3. Deposit Takers include: Individual or group of individuals, proprietary concern, partnership firm, LLP, Company, Associates of person, Trust, Co-operative society or any other arrangement, and do not include Government corporation, banking company etc. as specified.

Arjun (Fictional Character): Krishna, When is this Ordinance not applicable?

Krishna (Fictional Character): This ordinance is not applicable in case of the following:

1. Amount received by way of contribution towards capital by partners.

2. Amount received by an individual by way of loan from his relatives, or by any firm by way of loan from relatives of any of its partners.

3. Amount received as credit by a buyer from a seller on sale of any property (movable or immovable). That is for supply of goods or services or both.

4. Amount received in regular course of business, advance or dealership deposit.

5. Deposits of RBI, SBI, or any other institution approved by law for time being in force and as specified.

Arjun (Fictional Character): Krishna, is this ordinance applicable to Normal businesses?

Krishna (Fictional Character): Arjun, This ordinance is applicable only to those who are in the business of accepting deposits .This is not applicable to persons in regular business, that is, deposits taken for business. This means money taken for business as unsecured loans, hand loans, deposits, advance, etc. are not covered in the above ordinance. The fake news was circulated regarding this issue only.

For example,

If Proprietor in business e.g. “A” accepts deposit/unsecured loan from “B” , this ordinance is not applicable. So this ordinance is not applicable to persons having normal businesses.

Arjun (Fictional Character): Krishna, what should the taxpayer learn from this?

Krishna (Fictional Character): Arjun, this ordinance has been passed to ban false ponzi, chit fund, or other such deposit schemes. Those in money lending business should be alert. Small depositors will be protected from Unregulated deposit Schemes.

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  1. MALAIKA Luen MIRANDA says:

    sir can a proprietorship firm have one PAN number and many GST numbers for different proprietorship firms under the same PAN of the proprietor.

    Thank you.

  2. RAOSAHEB B. PATIL says:

    I am interested in Valuation of Properties & related issues. Please Compare WealthTax Registered valuers & Company Registered valuers and their legal aspects. Thank you.

  3. CA Ratan K Rathi says:

    Dear Sir,
    Any amount (as per tweet it includes deposits and unsecured loans) including (i)to(iv) under the subsection (4) of section (2), if deposit as per hundi chitthi is obtained for say 3 months terms and not repaid on due date, whether they become deposit which otherwise are exempt. all other illustration subclauses(i)to(iv) are are otherwise become specifically deposit but so may not be case of such real depositor. Please give your views in this regard.

  4. Thakkar says:

    Definition of “Deposit” means an amount of money received by way of an advance or loan or in other form, by any deposit taker with promise to return whether after a specified period or otherwise,
    Definition of ” Deposit Taker as per Section 2(6) (i) to (ix) cover all the person and all entity. It is very widely covered and need clarification from the Government of India

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March 2021