Summary: Sections 269SS, 269ST, and 269T of the Income Tax Act are crucial in ensuring transparency in financial transactions, particularly those involving loans, deposits, and specified sums. Section 269SS prohibits accepting loans, deposits, or advances of ₹20,000 or more in cash, mandating payments through account payee cheques, demand drafts, or electronic transfers. Violation leads to a penalty equal to the amount received. Section 269ST restricts cash transactions exceeding ₹2,00,000, whether in a single day, for a single transaction, or related to a single event, with penalties mirroring the amount received in violation. Section 269T mandates repayment of loans or deposits exceeding ₹20,000 through non-cash modes, with penalties applicable for non-compliance. These provisions are critical for individuals and businesses to avoid hefty penalties and ensure legal compliance. Reporting under these sections is mandated in Form 3CD during tax audits, with specific clauses detailing the nature of transactions that must be disclosed, ensuring that taxpayers adhere to these stringent regulations.
In the realm of financial transactions, the Income Tax Act of India has laid down stringent guidelines to ensure transparency and curb the circulation of unaccounted money. Sections 269SS, 269ST, and 269T are pivotal in regulating the modes of accepting and repaying loans, deposits, and specified sums, as well as undertaking transactions above certain thresholds. This article delves into the intricacies of these sections, detailing the limits imposed, the conditions for compliance, and the severe penalties that may arise from non-adherence. Understanding these provisions is crucial for individuals and businesses alike to navigate the legal framework and avoid punitive consequences.
Section 269SS: Mode of accepting loan or deposit or advance
- If opening balance + amt of transaction is > ₹ 20,000 – accept loan or deposit or advance in relation to IP through a/c payee cheque/DD/ECS.
- Otherwise, penalty @ 100% of such loan or deposit or advance. [Section 271D]
Clause 31(a) – Each loan or deposit > limit u/s 269SS taken or accepted during the PY.
Clause 31(b) – Each specified sum > limit u/s 269SS taken or accepted during the PY.
Section 269ST: Mode of undertaking transaction
- Shal receive ≥ ₹ 2,00,000 by a/c payee cheque/DD/ECS
- In aggregate from a person in a day
- In respect of a single transaction (invoices)
- In respect of transaction relating to one event or occasion from a person (marriage reception)
- Otherwise, penalty @ 100% of such receipt. [Section 271DA]
Clause 31(ba) – Each receipt > limit u/s 269ST, in aggregate from a person in a day or in respect of a single transaction or in respect of transaction relating to one event or occasion from a person, during the previous year, where such receipt is otherwise than by a cheque/DD/ECS. [cash or adjustment]
Clause 31(bb) – Each receipt > limit u/s 269ST, in aggregate from a person in a day or in respect of a single transaction or in respect of transaction relating to one event or occasion from a person, received by a cheque/DD, not being an a/c payee cheque or DD, during the previous year. [bearer cheque]
Clause 31(bc) – Each payment made > limit u/s 269ST, in aggregate to a person in a day or in respect of a single transaction or in respect of transaction relating to one event or occasion to a person, otherwise than by a cheque/DD/ECS during the previous year. [cash or adjustment]
Clause 31(bd) – Each payment > limit u/s 269ST, in aggregate to a person in a day or in respect of a single transaction or in respect of transaction relating to one event or occasion to a person, made by a cheque/DD, not being an a/c payee cheque or DD, during the previous year. [bearer cheque]
Section 269T: Repayment of loan or deposit or advance
- If balance as on the date of payment > ₹ 20,000 – repay loan or deposit (along with interest) or advance in relation to IP through a/c payee cheque/DD/ECS.
- Otherwise, penalty @ 100% of such loan or deposit or advance. [Section 271E]
Clause 31(c) – Each repayment of loan or deposit or any specified advance > limit u/s 269T made during the previous year.
Clause 31(d) – Repayment of loan or deposit or any specified advance > limit u/s 269T received otherwise than by a cheque/DD/ECS during the previous year. [cash]
In conclusion, Sections 269SS, 269ST, and 269T of the Income Tax Act serve as critical tools in promoting transparency and regulating financial transactions in India. Section 269SS mandates that loans, deposits, or advances exceeding ₹20,000 be received through account payee cheques, demand drafts, or electronic transfers, with non-compliance attracting severe penalties. Section 269ST restricts the receipt of large sums of ₹2,00,000 or more from a single person in cash or non-compliant methods, imposing penalties for violations. Similarly, Section 269T requires repayments of loans or deposits over ₹20,000 to be made through specified banking channels, with stringent penalties for breaches. Adhering to these regulations is essential for individuals and businesses to avoid significant penalties and ensure compliance with legal standards.
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