Cash loan repayment

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The Income Tax Act, specifically Section 269T, restricts cash loan repayments exceeding Rs. 20,000, including interest. However, the income tax department has clarified that when repaying loans to NBFCs or HFCs, each instalment is treated as a separate transaction. If an individual instalment is below Rs. 2 lakh, it can be paid in cash, and these instalments are not aggregated to determine the Rs. 2 lakh limit.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)
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04 August 2020 Assess cash loan received rs.19,000/- + rs.2000/- interest total 21,000/- cash loan re payment allowed in I.t. act.

CA Ankith Jain

CA Ankith Jain (Expert)
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04 August 2020 As per section 269T, you cannot repay a cash loan including interest of value more than Rs.20,000.

Aashok Kumar Sharma

Aashok Kumar Sharma

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09 August 2020 In this context, the income tax department clarified that if you are repaying the loan to NBFCs or HFCs, the one instalment of loan repayment shall constitute a single transaction. And so if the single loan instalment amount is less than Rs.2 lakh, it can be paid in cash. All the instalments paid for a loan shall not be aggregated for the purposes of determining the applicability of Rs.2 lakh limit.

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