X

Include transactions made through RTGS, NEFT, ECS and EFT in Section 269SS / 269T retrospectively

Section 269SS of the Income–tax Act, 1961 requires that acceptance of any loan or deposit or any specified sum exceeding Rupees twenty thousand may be made only by an account payee cheque or an account payee bank draft or use of electronic clearing system.

Section 269SS and 269T– Mode of taking or accepting and repayment of certain loans and deposits through banking channels

Issue/Justification

 Section 269SS of the Income–tax Act, 1961 requires that acceptance of any loan or  deposit or any specified sum exceeding Rupees twenty thousand may be made only by an account payee cheque or an account payee bank draft or use of electronic clearing system.

Further, Section 269T of the Income–tax Act, 1961 requires that the repayment of any loan or deposit or any specified advance exceeding Rupees twenty thousand may be made only by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account.

The Finance Act (No. 2), 2014 provided to allow the other valid modes like “use of electronic clearing system through a bank account” w.e.f 01.04.2015. Extending the scope w.e.f Assessment year 2015-16 limits the purpose of the amendment. Several litigations are pending since transactions made through RTGS, NEFT, ECS and EFT  was not covered within the scope of section 269SS and 269T.

Suggestion by ICAI

In order to clarify the intent of the law, it is therefore suggested that the beneficial amendment as made by Finance (No. 2) Act, 2014 extending the scope of payment modes by including electronic fund transfer should be effective for all pending cases instead of AY 2015-16, by inserting an explanation in both section 269SS and section 269T.

Source-  ICAI Pre- Budget Memorandum–2018 (Direct Taxes and International Tax)
Categories: Income Tax
X

Headline

Privacy Settings