Finance Act 2017 proposes to insert Section 269ST in the Income Tax Act of 1961 to provide that no person shall receive an amount of three lakh rupees or more, -
(a) in aggregate from a person in a day;
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.
The comprehend the effect of the proposed Section a combined reading and understanding of Section 269 SS and 269 T together with the new proposal is very much necessary. Scope of Section 269 SS and 269 T may be summarized as follows:-
- Bank accepts deposit - Sec. 269 SS is not applicable (proviso to the Section)
- Bank accepts loan repayment - Sec.269 SS impose embargo only on deposits and loans accepted and not on loan repayment
- Customer accepts loan from the Bank - Sec. 269 SS is not applicable (proviso to the Section)
- Bank repay deposit - Sec. 269 T is not applicable (proviso to the Section)
- Customer repay loan to Bank - Sec. 269 T is not applicable (proviso to the Section)
What about the transactions other than mentioned above? Transaction related to deposits and loans amounting to Rs. 20,000 other than those mentioned above should be by means of account payee cheque or draft. Transaction not related to deposit or loan need not follow this requirement. In other words, transaction by a person with another person, only in the nature of deposit or loan, falls under the ambit of these Sections. This also means that transactions not in the nature of deposits or loans need not be made by cheque or draft. Thus acceptance and payment of deposits and loans from/by a Bank do not fall under the ambit of Section 269 SS and 269 T. As these Sections are applicable in the case of deposits and loans only all other transactions with a Bank or any other person, not in the nature of deposit or loan, do not attract the provisions of these Sections.
Insertion of Section 269 ST proposed in the Finance Act 2017 provides that acceptance of Rs.3,00,000/- or more other than those in the nature of transactions mentioned in Section 269 SS shall be made by account payee cheque, draft or electronic clearing system. Resultantly, deposits and loans are not covered by this Section. Further, banks are excluded from the operation of Section 269ST. All other transactions by a person with another person, not in the nature of deposit or loan, attract the provisions of the Section 269 ST.
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