ANALYSIS OF SECTION 269SS AND 269T OF INCOME TAX ACT

269SS AND 269T OF INCOME TAX ACT

WHAT IS SECTION 269SS?

As per Section 269SS of Income tax Act, any person should take/ accept:

• Loan/ deposits or
• Advance in relation to immoveable property.

Only by account payee cheque or D.D., any other prescribed electronic modes, if the amount is Rs. 20,000 or more.

Note: On the date of taking or accepting such loans or deposits or advance in relation to immoveable property, any loan or deposit or advance in relation to immoveable property taken or accepted earlier by such person and unpaid on such date shall also be considered for Rs. 20,000 limit.

SPECIFIED MODES OF TRANSACTION

As per income tax rules, the specified modes of accepting loans or deposits or specified sums are:

1. Account payee cheque/ bank draft.
2. Electronic Clearing System (ECS) through a bank account.
3. Net Banking.
4. Credit Card.
5. Debit Card.
6. RTGS.
7. NEFT.
8. BHIM.
9. IMPS
10. UPI

EXCEPTION U/S 269SS

Section 269SS is not applicable if loans/ advances/ deposit is taken from or by:

1. Government.
2. Banks, Co-operative Banks, Post office.
3. Government Company.
4. Person having only Agriculture Income.
5. Corporation established by Central, State, Provincial Act.
6. Any others as notified by CBDT.

AMMENDMENT TO SECTION 269SS

Limit of Rs. 2,00,000 is applicable in case of any deposits or loan where:

1. Deposit is accepted by Primary Agricultural Credit Society (PACS) or Primary Co-operative Agricultural and Rural Development Bank (PCARD) from its members, or
2. A loan is taken from Primary Agricultural Credit Society (PACS) or Primary Co-operative Agricultural and Rural Development Bank (PCARD) by its members.   

PENALTY U/S 271D:

If assessee fails to follow Section 269SS, then penalty shall be levied @ 100% of such loan/ Deposit/ Advance. It shall be imposed by Joint Commissioner. A person accepting the loans and deposits in cash above the prescribed limits is liable to pay such a penalty. Hence, the receiver of the money is required to ensure that the provisions of Section 269SS are complied with while accepting such payments. However, if the person can prove that there was a reasonable cause for such transactions and no malafide intentions, he/ she may not be penalized.

EXAMPLES:

Example 1: Kamal accepted Rs. 12,000 as a loan and Rs. 13,000 as a deposit from Mr. Sharma on 16/12/2024 by way of a bearer cheque

Ans: Since bearer cheque is not covered under the specified means as stated above and he took a total of Rs. 25,000 in loan and deposits from Mr. Sharma on 16/12/2024 he violated the conditions of Section 269SS and 100% penalty i.e. Rs. 25,000 shall be attracted u/s 271D.

Example 2: Kamal accepted loan from Mr. Sharma as follows:

          on 26/07/24 Rs. 15,000 by way of account payee cheque

          on 10/12/24 Rs. 15,000 by way of cash.

Ans: Since, On the date of taking or accepting such loans or deposits or advance in relation to immoveable property, any loan or deposit or advance in relation to immoveable property taken or accepted earlier by such person and unpaid on such date shall also be considered for Rs. 20,000 limit as a result Mr. Kamal Violated the conditions of Section 269SS and 100% penalty i.e. Rs. 15,000 shall be attracted u/s 271D.

Example 3: Kamal accepted loan from Mr. Sharma as follows:

          on 26/07/24 Rs. 15,000 by way of cash.

          on 10/12/24 Rs. 15,000 by way of account payee cheque.

Ans: In the given case since Mr. Kamal accepted Rs. 15,000 by way of account on 10/12/2024 the provision of Section 269SS have been complied with and no penalty u/s 271D arises.

WHAT IS SECTION 269T?

As per Section 269T of Income Tax Act, any person should repay:

• Loan or deposit (together with interest).
• Advances in relation to immoveable property.

Only by account payee cheque or D.D., any other prescribed electronic modes, if the amount is Rs. 20,000 or more.

Note: On the date of repayment of such loans or deposits or advance in relation to immoveable property, any loan or deposit or advance in relation to immoveable property outstanding on such date shall also be considered for Rs. 20,000 limit.

SPECIFIED MODES OF TRANSACTION

As per income tax rules, the specified modes of accepting loans or deposits or specified sums are:

1. Account payee cheque/ bank draft
2. Electronic Clearing System (ECS) through a bank account.
3. Net Banking.
4. Credit Card.
5. Debit Card.
6. RTGS.
7. NEFT.
8. BHIM.
9. IMPS
10. UPI

EXCEPTION U/S 269T

Section 269T is not applicable if loans/ advances/ deposit is taken or accepted from:

1. Government.
2. Banks, Co-operative Banks, Post office.
3. Government Company.
4. Corporation established by Central, State, Provincial Act.
5. Any others as notified by CBDT.

PENALTY U/S 271E:

If assessee fails to follow Section 269T, then penalty shall be levied @ 100% of such loan/ Deposit/ Advance repayment. It shall be imposed by Joint Commissioner.

DIFFERENCE BETWEEN 269SS AND 269T?