- Section 269SS, 269T, and 269ST of
Income Tax Act will prevent the economy from fraudulent cash transactions.
- These sections set the limit upto which a person can accept loan, deposit and can repay the same in cash.
- Limit is also set for cash receipts from a single person in a day.
- If a person contravenes the provisions of these sections then a heavy penalty shall be levied.
- Penalty shall be 100% of transactions, which is itself a huge penalty.
In the following we have explained in detail with examples section 269SS, 269T, and 269ST:
What is Section 269SS of Income Tax Act?
As
per section 269SS, if a person is
taking (accepting) loan, deposit or advance in relation to immovable property from any other person of Rs. 20,000 or more in cash, then heavy penalty for the same may be imposed.
So,
under section 269SS, person shall only accept loan, deposit or advance in relation to immovable property by:-
- Account payee cheque or
- Account payee draft, or
- Using electronic clearing system, or
- Any other electronic mode
If the amount is Rs.20000 or more.
While checking the limit of Rs.20000 any loan or deposit or advance in relation to immovable property taken earlier by such person which is unpaid on such date of checking shall also be consider.
Person has to use above mentioned electronic system for accepting loan, deposit or advance in relation to immovable property only if:
1)
Amount of loan, deposit or specified sum is Rs. 20000 or more.
Example: If Mr. X wants to take a loan from Mr. Y of Rs. 25000 then he shall not accept cash.
2)
Aggregate of loan, or specified some is Rs. 20000 or more.
Example: If Mr X accepts a loan from Mr.Y Rs. 7000 and also accepts a deposit of Rs. 18000. So, in aggregate Mr. X accepts Rs. 25000 which exceeds Rs. 20000 then in this case he shall not accept such amount in cash.
3)
A person has already taken a loan, deposit or specified sum and its outstanding
amount is pending to repay.
In
such a case, if the same person is also taking an additional loan, deposit for
specified sum then aggregate of new and existing amount should be considered.
Example: If Mr.
X has already taken a loan of Rs. 15000 and it is pending to repay, if he again
takes a loan from the same person of Rs. 6000 then in aggregate Rs. 21000
exceeds the limit of Rs. 20000 then he has to use the electronic mode.
4)
If amount or aggregate amount in point 1, 2 and 3 is Rs. 20000 or more.
So, in all the above cases one
cannot accept the amount in cash otherwise a penalty shall be imposed.
Let’s have some more examples:
1) MR. A
taken loan from Mr. B on 12/06/2025 of Amt. Rs.17000 in cash, so it is less
than Rs.20000 hence no violation of 269SS. But if he again takes loan of Amt.
Rs.18000 in cash on 16/12/2025, then total Amt. 17000+18000 in cash exceeds
Rs.20000, hence there is violation and penalty levied on whole Amt. of
Rs.35000.
2) MR. A
taken loan from Mr. B on 12/06/2025 of Amt. Rs.25000 through ECS, hence no
violation of 269SS. But if he again takes loan of Amt. Rs.12000 in cash on
16/12/2025, then total Amt. 25000+12000 exceeds Rs.20000, hence there is
violation and penalty levied on Amt. of Rs.12000 because at time we taking loan
of Rs.12000 existing loan already exceeds the limit.
3) MR. A
taken loan from Mr. B on 12/06/2025 of Amt. Rs.18000 in cash, so it is less
than Rs.20000 hence no violation of 269SS. And he again takes loan of Amt.
Rs.15000 through ECS, then also no violation of 269SS.
4) MR. A
taken loan in cash of Amt. Rs.18000 and the same is repaid. And if MR. A again
takes loan of Amt. Rs.19000 in cash, then no violation of section 269SS.
Points
to be noted
Limit
of Rs.200000 is applicable instead of Rs.20000 in the following cases:
- any deposit accepted by Primary Agricultural Credit Society (PACS) or Primary Co-operative Agricultural and Rural Development Banks (PCARD) from its members or
- any loan taken by members from PACS or PCARD.
Also Read: Section 115ba, 115baa, 115bab of Income Tax Act 1961
What is Section 269T of Income Tax Act?
Section
269T provides information regarding provisions related to mode of repayment of
loans, deposits or advance in relation to immovable property.
Section
269T prohibits any person to repay loan, deposit or advance in relation to immovable property of Rs.20000 or more in cash if a person wants to repay loan whose:
1)
Amount of loan, deposit on advance in relation to immovable property (along with interest) is Rs
20000 or more.
Example: Amount
of loan to be repaid is Rs. 12000 and interest thereon is Rs. 9000 then in
aggregate it exceeds Rs. 20000.
OR
2)
Aggregate amount of loan, deposit or advance in relation to immovable property on
the date of repayment is Rs. 20000 or more which is held in his own name or
jointly with any other person.
Example: If Mr.
X and Mr. Y, both have a joint loan account and they want to repay the loan of
Rs. 25000 then cash repayment is not allowed.
So, above two situations person
has to repay the loan by:
- Account payee cheque or draft
- Using electronic clearing system (NEFT/ RTGS)
- Any other electronic mode
If the
amount is Rs.20000 or more.
While
checking the limit of Rs. 20000 any loan or deposit or advance in relation to
immovable property outstanding on such date of checking shall also be consider.
Example:
Mr. X has outstanding loan of Rs.31000. on 1/4/2025 he paid 15000 in cash, so
here while making payment of Rs.15000 in cash there is outstanding balance of
Rs.31000 which is more than Rs.20000, so here violation happen of section 269T.
But if he again repay Rs.16000 on 1/06/2025 in cash then there is no violation because at the time of repayment on 1/06/2025 outstanding balance is of Rs.16000 only (31000-15000). So here there is no violation of section 269T.
Also Read: Section 194N of Income Tax Act (TDS on Cash Withdrawal)
When section 269SS and 269T is not acceptable?
Section
269SS not apply in case of Government, govt. company, Banks, co-operative
banks, post office, person having agriculture income, corporation established
(by central, state, provisional act), any other person as notified by CBDT.
Section
269T not apply in case of Government, govt. company, Banks, co-operative banks,
post office, corporation established (by central, state, provisional act), any
other person as notified by CBDT.
What is the
reporting requirement of section 269ss and section 269T in Form 3CD?
Auditor
has to report the transactions related to section 269ss and 269T in clause 31
of Form 3CD.
What is Section 269ST of Income Tax Act?
Section
269ST prohibits the person to receive cash of Rs. 2 lac or more except by account payee cheque or demand draft or any other electronic modes:
1)
From a person in a day (in aggregate)
Example: Mr. X
received cash Rs. 60000 in the first bill and again received cash of Rs. 170000
from the same person in a day then in aggregate cash receipt is 230000 which
exceeds the limit of Rs. 200000.
Or
2)
In a single transaction
Example: Hospital bill is of Rs.400000 and Mr. X pay the bill in 4 installments of Rs.100000 each. So, here amount exceed Rs.200000 as single transaction is of Rs.250000.
Or
3) In transactions related to one event or occasion from a person.
Example: Cash
received in marriage events etc.
If a person wants to receive of
cash of Rs.2 lac or more in the above mentioned situation than he can receive
amount by:
- Using account payee cheque or draft
- Electronic clearing system, (NEFT/ RTGS)
- Any other electronic mode as may be prescribed.
When section 269ST is not applicable?
This
section 269ST is not applicable to:
- Any receipt by the government, banking company, post office saving bank or co-operative Bank.
- Transactions covered under section 269SS.
- Such other people may be prescribed.
Other person notified in Notification No.
28 & 57/2017:
- Cash withdrawal from Bank, Co. operative banks, post office.
- Receipts by bank correspondent by bank or Co. operative banks.
- Receipts by ATM Operator.
- Receipts from an agent by an issuer of pre-paid payment instruments.
- Receipts by credit cards Company against bills raised in respect of one or more credits cards.
- Receipts of Awards from Govt. exempt u/s 10(17A).
What is the
penalty of contravention under section 269SS, 269T and 269ST?
|
Contravention
under section |
Penalty
Section |
Amount
of Penalty |
|
269SS |
271D |
100% of Loan, deposit or advance in relation to immovable property |
|
269T |
271E |
100%
of Loan, deposit or advance in relation to immovable property |
|
269ST |
271DA |
100% of cash receipt. |
So,
if a person contravenes the provisions of this section then a heavy penalty
shall be imposed.
Summary
Section
269SS, 269T and 269ST prevents fraud in large cash transactions. These will
help to curb the black money. This section sets the limit of cash transactions
for activities like loans, deposits, advances, cash receipts.
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