Section 269ss is basically about cleaning and repayment of the required debt. This law is imposed to clear the black money. In India, tax avoidance has been a problem for a prolonged time, causing an economic depression. False cash transactions result in illegal funds, which leads to tax evasion. Fraudulent cash transactions result in illegal funds, which leads to tax evasion.
The following are some examples of such limitations:
- The loan, deposit, or specified amount is worth at least INR 20,000, or the total value of the loan, guarantee, or defined sum is at least INR 20,000.
For instance, Mr. A receives a 10,000-INR loan with a 5,000-INR deposit and a 6,000-INR stipulated amount. Will the restrictions be implemented piecemeal? Mr. A is obliged to take cash only in the listed means of payment since all three, i.e. INR 21,000, exceeds INR 20,000.
- Assume that any deposit, loan, or specified amount taken or accepted from the depositor on the day the deposit was received or the loan or fixed sum was born is still outstanding. In this case, the overdue sum, or the total of all due amounts, is INR 20,000 or more.
Mr. A, for example, previously borrowed INR 18,000 from ABC&Co. and now requests INR 2,000 from them. The sum of INR 18,000 is still owing to this day. Because a total loan of 18,000 INR plus a 2,000 INR supplementary loan equals 20,000 INR, as a result, under section 269ss of income tax act, such a loan will only be obtained via specific payment mechanisms.
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A person cannot take out a loan, make a deposit, or receive any amount in cash from another person totaling INR 20,000 or more.
- In the section read with rule 6ABBA, the following payment options are listed:
- a bank draft in the name of the account payee
- a check made payable to the account owner
- A bank account is used to access an electronic clearing system (‘ECS’).
- a charge card
- a credit card
- Banking over the internet.
- The IMPS (Immediate Payment Service) mechanism enables you to transmit money immediately away.
- UPI (Unified Payment Interface).
- RTGS (real-time gross settlement)’
- NEFT (National Electronic Funds Transfer)
- Aadhar Pay BHIM (Bharat Interface for Money)
Reporting of transactions under Section 269SS
If the transactions indicated in section 269ss of income tax act exceed the limit, they must be documented on Form 3CD, Clause 31. (tax audit report). Under the subclauses listed below, the tax auditor must provide the following information:
Subclause (a): If the amount of any loan or deposit obtained or authorized during the financial year exceeds the maximum set out in section 269ss of income tax act, details such as name, address, PAN, amount of loan or deposit, amount overdue, and so on must be provided.
Subclause (b): Details such as name, address, and PAN (if available) are needed for any declared amount that exceeds the maximum set out in section 269ss of income tax act.
Subclause (c): Details of each loan, deposit or specified amount repaid more than the restrictions outlined in section 269T during the financial year.
Subclause (d): Details of any loan, deposit, or specified amount received during the financial year over the restrictions outlined in section 269T by any mechanism other than those listed.
Subclause (e): Details of each repayment of each loan, deposit, or specified amount received more than the limitations outlined in section 269T via the approved ways of payment during the financial year.
Conclusion
During searches, tax agents uncover concealed and unreported cash. Previously, the perpetrator might get away with it by claiming the funds were a loan or deposit from friends or family. Fraudulent operations involving loan payments and repayments and cash deposits would be used by those who wanted to avoid paying taxes.
Section 269ss of income tax act, which prohibits cash payments, was enacted to combat the rising number of cash transactions that led to the buildup of illegal funds.
