Section 269ss & 269t

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CA Roopchand diya (Querist)
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12 August 2014 Whether interest credited on loan account but not paid is to be taken as a loan acceptance and it should be disclosed in 3cd under clause 24(a)section 269ss?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 August 2014 Interest credited can be considered to be in the nature of loan and reporting becomes necessary. Inference is from ICAI publication viz., Issues on Tax Audit.

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CA Roopchand diya

CA Roopchand diya (Querist)
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12 August 2014 If the opening balance of a loan is Rs. 1,00,000/-, interest credited during the previous year Rs. 24,000/- and the closing balance is Rs. 1,24,000/-, what are the reporting requirements under clause 24(a)?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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23 July 2025 This is a very good question and has been the subject of professional debate, especially in the context of Tax Audit Report (Form 3CD), Clause 24(a), concerning Section 269SS of the Income-tax Act, 1961.

Let’s break this down and address each point:

📌 1. Applicability of Section 269SS
Section 269SS prohibits acceptance of any loan or deposit of ₹20,000 or more otherwise than by account payee cheque or bank draft or electronic clearing system, and violations attract penalty u/s 271D.

📌 2. Is Interest Credited Considered as a Loan Acceptance?
✔ Yes, as per the ICAI’s “Guidance Note on Tax Audit”, interest credited to the account of the lender (without actual payment) may be considered as part of the loan amount accepted.

If interest is credited to the loan account (i.e., the principal is increased), it could be interpreted as constructive acceptance of further loan.

Especially if this credit increases the loan outstanding, it gets clubbed with the existing loan.

🧾 3. Reporting in Clause 24(a) of Form 3CD
Clause 24(a) requires reporting of all loan/deposit amounts accepted in violation of Section 269SS during the year.

🟨 Example Scenario:
Opening Loan Balance: ₹1,00,000

Interest Credited: ₹24,000

Closing Balance: ₹1,24,000

➡️ Even though the original loan was accepted earlier (say in a prior year), the ₹24,000 credited interest during the year is a fresh constructive loan acceptance, and if not done via permitted modes, needs to be reported.

✅ Conclusion:
Yes, the interest of ₹24,000 credited during the year should be reported under Clause 24(a) if it was not routed through account payee cheque/bank transfer.

It is treated as a fresh acceptance of loan/deposit, thereby attracting Section 269SS if above ₹20,000 and not complying with the prescribed modes.

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