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Section 269T of the Income Tax Act 1961
Mansi Bhatt | Updated: 2 April, 2022
Sections 269T of the Income Tax Act 1961 deals with repayment of loan, advances and deposits. This section was introduced to curb the problem of black money. Tax evasion is one of the serious problems in India. False cash transactions give birth to black money which in turn increases tax evasion
What is Section 269T of the Income Tax Act 1961?
A person cannot repay loan or accept deposit from another person otherwise than by Banking Channel, if-
- Amount of loan or deposit is Rs. 20,000 or more, or
- Sum total amount of loan, deposit, and the specified sum is Rs. 20,000 or more; e.g. Rahul wants to repay a loan of Rs. 6,000, a deposit of Rs. 9,000 and advance of Rs. 7,000 to Vineet, he cannot repay it in cash because the total sum is 22,000.
*Banking channel means- Banking Channels made available by the bank to its customers so that the customers can access the various activities. (Eg. Cheques, Draft and UPI.)
Exceptions to Section 269T of the Income Tax Act 1961:
In the following cases, Section 269T of income tax act 1961is not applicable:
- The Government;
- Any banking company, post office savings bank or co-operative bank;
- Any corporation established by a Central, State or Provincial Act; and
- Any institution, association or body or class of institutions, associations or bodies notified in Official Gazette.
Penalty:
If any of the above provisions are violated then the penalty shall be equal to amount of loan or deposit taken or accepted or repaid.