Repayment of Loan

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deepak (Querist)
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13 March 2009 If A pay loan by chq. Rs. 1 Lakh to B. Now B wants make repayment of loan by cash in installment below Rs. 20000/-. Is it allowed under Income tax or not ?

srinivasan pooranalingam

srinivasan pooranalingam (Expert)
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13 March 2009
Under the provisions of Section 269T of IT Act, 1961, repayment of loan exceeding Rs. 20,000/- otherwise than a/c payee cheque or account payee demand draft, in a year is prohibited and attracts 100% penalty. Hence, it is advisable to repay the same either by a/c payee cheque or a/c payee demand draft.