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Sec 269

CA Rajnik Galani (prctice) (154 Points)

07 July 2013

Dear Friend,

Can I Give Loan Rs.20000 Or More To any person in cash ?

Any Tax Liablity arise?

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9 Replies

C.A. Jignesh N. Mehta (C.A.) (1030 Points)
Replied 07 July 2013

No, Section 269SS or 269T are not applicable to loan given.

They cover loan taken or repayment of loan in cash above 20000.

So since you are giving loan there is no problem.

However the person taking from you will face penalty provision on the same.

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Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 10 July 2013

Dear Rajnik, please read the provisions of Section 269SS. It reads as Loan Taken or Accepted.

So if you are giving any loan to someone above Rs 20K in cash then it will definitely attract tax liability.

269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,—

C.A. Jignesh N. Mehta (C.A.) (1030 Points)
Replied 10 July 2013

Originally posted by : Giridhar S Karandikar
	Dear Rajnik, please read the provisions of Section 269SS. It reads as Loan Taken or Accepted. So if you are giving any loan to someone above Rs 20K in cash then it will definitely attract tax liability. 269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,—

The loan is not taken or accepted, The loan is given in this case and hence not covered by section 26SS or Section 269T.

CA Rajnik Galani (prctice) (154 Points)
Replied 11 July 2013

Dear Friend

Suppose I Paid Loan To My Worker In Cash Rs. 35000.

Any Tax Liablity Arise?

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 11 July 2013

Dear Jignesh, can you please clarify the difference between Loan Accepted and Loan Given.

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C.A. Jignesh N. Mehta (C.A.) (1030 Points)
Replied 12 July 2013

No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,—

The section covers , loan taken or deposit accepted. There is no such word as loan accpeted. Loan can only be taken within the meaning of Section 269SS and Deposit can be accepted within the meaning of Section 269SS.

I hope this will clear all your doubts.

Lastly,

To justify the section, it is taxing only one side of transaction. If is taxes the other side as well then on one same entry there will be double taxation which is never the intention of Income Tax Act.

I hope you get the motives of the act.

C.A. Jignesh N. Mehta (C.A.) (1030 Points)
Replied 12 July 2013

Circular 387 - dated 6th July 1984

FINANCE ACT, 1984

With a view to countering this device, which enables taxpayers to explain away unaccounted cash or unaccounted deposits, the Finance Act has inserted a new section 269SS in the Income-tax Act debarring persons from taking or accepting, after 30th June, 1984, from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if the amount of such loan or deposit or the aggregate amount of such loan and deposit is Rs. 10,000 or more. This prohibition will also apply in cases where on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), and the amount or the aggregate amount remaining unpaid is Rs. 10,000 or more. The prohibition will also apply in cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on the date on which such loan or deposit is proposed to be taken, is Rs. 10,000 or more.

The amount was raised to 20000/- later on.

However the intention of provision is to prohibit receipt of cash in manner of loan or deposit and not payment.

However this has direct impact on payment too - as one is receiver and other is payer

C.A. Jignesh N. Mehta (C.A.) (1030 Points)
Replied 12 July 2013

please refer for more guidance

/articles/a-study-on-269ss-269-t-7250.asp

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 12 July 2013

As per the plain reading of Section 269SS No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,— Here it covers both Loan Accepted/Taken as per above. So How can you say that the sectino covers onlt loan accepted and deposit taken Moreover default is being committed from both the parties, so the revenue cannot put the burden only on one party and leave the other party, by recovering the tax only from one party.