Individual taxpayers do normally accept and repay amounts in nature of loan or deposit without even aware of stringent restriction imposed under the Income Tax act. Read on to know more.
With Regard to acceptance of loan or deposit –Section 269SS
Under the provisions of Indian Income Tax, no person can accept any loan or deposit of Rs. 20,000 or more, otherwise than by way of an account payee cheque, or an account payee bank draft. For this purpose, the limit of Rs. 20,000 will apply to a case even if on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from such depositor is remaining unpaid and such unpaid and such unpaid amount together with loan or deposit to be accepted, exceeds the aforesaid limit.
Further, if the loan or deposit is accepted in contravention of above referred provisions, then a penalty of an amount equal to loan or deposit may be imposed by the Joint Commissioner.
With Regard to repayment of loan or deposit– Section 269T
No person shall repay any loan or deposit otherwise than byÂ way of an account payee cheque or account payee bank draft drawn in theÂ name of person, who has made the loan or deposit, if (i) the amount of the loan or deposit together with interest, if any, payable thereon is Rs. 20, 000 or more;Â OR (ii) the aggregate amount of the loans or deposits held by such person, either in his own name or jointly with any other person on the date of such repayment together with interest, if any, payable on such loan or deposits is Rs. 20,000 or more.
However, repayment of loans and deposits accepted from (i) Government, (ii) banking company, post office savings bank or cooperative bank, (iii) Government company, (iv) corporation established by a central, state or provincial Act, (v) do not attract the above referred provisions.
Further, if any loan or deposit is repaid in contravention of above referred provisions, a penalty equal to the amount of repayment of loan or deposit shall be imposed by Joint Commissioner.
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