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Can i repay my loan with cash in hand

Poorna (software engineer) (44 Points)

22 November 2017

Hi,

I have transferred money to my friend over last 12 month amounting to 10Lacs via bank transfer. And now he returned in cash. Is it possible to pay this cash to repay my loan?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (167898 Points)
Replied 22 November 2017


	I have transferred money to my friend over last 12 month amounting to 10Lacs via bank transfer. And now he returned in cash. Is it possible to pay this cash to repay my loan?

1. First of all you cannot accept any such cash (more than 2 lakhs) from anyone, as per section 269ST

2. Your friend cannot repay such loan by cash (more than 20K) as per section 269T

3. Both are liable for equal amount of penalties.

4. Yes, you can repay loan by cash.... provided lender is BANK...

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Poorna (software engineer) (44 Points)
Replied 22 November 2017

The loan i was referring to is "SBI Home loan"

What are my options now?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (167898 Points)
Replied 22 November 2017

No change in 1. 2 & 3.

Even for 4. No change

Poorna (software engineer) (44 Points)
Replied 22 November 2017

Hi Sir,

Thanks for the reply.

For 4, Can I deposit 10Lacs into my sbi loan account in form of cash?

Will it have any compliance issue? (Recently there is menu item in the income tax website: compliance --> Cash Transactions 2016.)

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (167898 Points)
Replied 22 November 2017

"Can I deposit 10Lacs into my sbi loan account in form of cash? Will it have any compliance issue?"

Definitely. The justification of such a large cash in hand will be asked for. It can be reason for scrutiny Notice u/s. 143(1).

Cash Transaction 2016 compliance is all together different issue.

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Poorna (software engineer) (44 Points)
Replied 22 November 2017

I think I found the answer

"The circular states that receipt of repayment of loan by the Non-Banking Finance Companies (NBFC) and Housing Finance Companies (HFC) will fall under the purview of section 269ST clause (b) if the repayment of 'one' loan instalment is equal to or above Rs. 2 lakh. "All the instalments paid for a loan shall not be aggregated for the purposes of determining applicability of the provisions of section 269ST." This means that the Rs 2 lakh limit will only be applied to a single loan instalment repaym ..