Cash Transactions

u can pay loan rs. 20000 per month in cash. sec. 40A (3) Fof payment of expenditure not for loan

so you pay  loan in cash.

DEPENDS UPON THE LENDER IT WILL CHANGE

40A(3) is for payment of expense.

In this case 269SS/T is there & penlaty is full amount involved in such transaction.

 Dear friend u/S 269SS/ 269T. if u have made payment to a director and substantial interest holder person amount of cash (whether via cash or cheque) > 20000

Deemed to be income for A.Y.

for further clarification kindly refer to Income Tax Act. 

if loan is repaid for an amount exceeding rs. 20000 then it will result in a penalty u/s 269t equal to the amount of repayment

Originally posted by : Sunil
	No. Any repayment of Rs.20,000/- and above in a year has to be by a/c payee aheque or d/d. You cannot repay by cash, NEFT, RTGS or bank transfers. The repayment has to be strictly by these instruments crossed as applicable.

How transaction under NEFT or RTGS can be considered as "Cash transaction?"

I think the law needs to be ammended to provide for fund transfer to NEFT and RTGS.. A plain reading of the section does imply that the payment has to be by a "account payee" cheque.. However, one can always argue that the intent of law is not to curb repayments thru banking channel, but to curb dealings in cash..

Jayeshji. This law was drafted way back in 1984 when we did not have any MICR clearing system even. However, our lawmakers do not apply their mind. When they included audited individuals and HUF for TDS, they step wise started exempting first the 194J and then 194C for personal payments. For other sections they still have to deduct for their personal remittances. Same is the case here. They have specified ECS and Credit card for expenditure under rule 6DD but nowhere have they specified NEFT and RTGS. Technology evolves faster than the minds of our beurocrats. As far as beurocrats are concerned only meanness evolves faster than anything else.

tarun is correct.the correct section is 269ss/269t and not 40A(3)

Dear Friends

Can any one tell me whether Sec.40A(3) is not applicable to an educational society (Regd under societies registration act. Because they have made several payments for expenditure exceeding Rs.20000/- by cash.

The management is telling that the section is applicable only to Business Organisations and not to the

society.

Regards

Nandhini

Section 40A(3) is not relevant section for this problem. The relevant section is 269T.

One thing is not clear from the problem. Who is the lender?

If the Lender is Bank or a Financial Institution, then repayment is cash is permissible. However, for other lenders, the repayment amount should not exceed Rs. 20000 in aggregate during the year. You can repay the loan in Rs. 20000 in cash in annual instalments, i.e. Rs. 20000 per year.

Regards, 

CA. Amol Gopal Kabra