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Tax on cash withdrawal

sz (Others) (37 Points)

21 July 2015

I’ve accumulated about 30Lakhs from my Salary over the past 8 years. This amount I made, after proper TDS deductions. I deposited that money to my Mother’s A/C, and my mother later transferred 12Lakhs to my Sister A/C. Now we are planning to buy a property, and we need to give cash to the owner. My question is, if we withdraw the amount this year, will there be any TAX implication? The Bank's branch manager said there will be penalties if we withdraw more than 10Lakhs from one A/C in a financial year. Please advise.

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10 Replies

Z ( ) (2965 Points)
Replied 21 July 2015

There will be issues in S. 269SS and 269T. Now for payment above Rupees 20,000 you will have to issue cheque or use any of ther other specified mode of payment, otherwise penalty may be levied u/s 271E

269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if,—

(a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or

(b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or

(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b),

is twenty thousand rupees or more:

"specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.

Text from memorandum

In order to curb generation of black money by way of dealings in cash in immovable property transactions it is proposed to amend section 269SS, of the Income-tax Act so as to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more.

It is also proposed to amend section 269T of the Income-tax Act so as to provide that no person shall repay any loan or deposit made with it or any specified advance received by it, otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount or aggregate amount of loans or deposits or specified advances is twenty thousand rupees or more. The specified advance shall mean any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place

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sz (Others) (37 Points)
Replied 21 July 2015

Thank you for your reply. Are you saying that if we pay by Cheque than there will be no problem?

Z ( ) (2965 Points)
Replied 21 July 2015

If by an account payee cheque or account payee bank draft or by electronic clearing system, then there should not be any issues.

sz (Others) (37 Points)
Replied 21 July 2015

Paying by Cheque also means withdrawal. So you mean, withdrawal more than 10Lakh in Cheque/Bank Draft/E-Clearing is safe to do.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 July 2015

the terminology "cash" is the root of probs, other than cash everything is fine, provided its done through proper chanels

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 July 2015

you can ask for a banker's cheque, or demand draft upto 50 lacs without any hassle from any bank account provided the money is there in your account.

depositing cash and making draft is not allowed

sz (Others) (37 Points)
Replied 21 July 2015

Thank you Mr. Sharma for your reply. Could you please elaborate on "done through proper chanels", I got confused

pranit (na) (66 Points)
Replied 21 July 2015

U should give cheq to owner. Further u should disclose pur of prop in ur ITR of relevent year. For any query pls feel free to call 7738620085 Pranit patil Regards.

ashish (article) (151 Points)
Replied 22 July 2015

sir i want to adk that in present scenario...isnt mr surz.......can pay such amt by cash........because it is not a loan nor deposit.....nd 269ss and 269t are for loan & advances.....as z is saying that it is proposed......so it will be a future situation and not present scenario......so in present position of law...why it should not be done...?????

Z ( ) (2965 Points)
Replied 22 July 2015

Kindly read the explanation

""specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. "

This explanation exists in both S. 269SS and 269T

The word otherwise covers any kind of payment, including a single lumpsum amount.

Further I cited that from memorandum budget because language of that was comparitively easy than the language of the actual provision. The provision is in force.