There is an unsecured loan in my books of Rs. 4lakhs.
This was taken through a cheque.
Can it be repaid in cash? or will that attract any penalty?
CA Chandan Sharma
(Chartered Accountant)
(283 Points)
Replied 18 February 2016
Part I: Please refer section 269T of the Income Tax Act, 1961 which states as:
"No branch of a banking company or cooperative bank and no other company or cooperative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee draft drawn in the name of the person who has made the loan or deposit if-
(a) The amount of the loan or deposit together with interest payable thereon is Rs.20,000 or more ..........."
Part II: Consequences for default: Unde section 271E of the Income Tax Act, 1961 as
"If a person repays any loan or deposit referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so repaid.
Conculsion: Cash repayment not allowed and if done than penalty equal to repayment amount i.e.Rs.4 Lacs (assuming whole amount repaid)
CA. Chandan Sharma
Swami Ayyappa Nuli
(TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER)
(1372 Points)
Replied 18 February 2016
Agree with Chandan Sharma. If outstanding principle amount along with Interest exceeds Rs.20,000 then Acceptance and Repayment of even a Rupee from such unsecured loan lender in cash is not allowed as per 269SS/T provisions
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