Query regarding form 3CD Clause 31

Hi Piyush,

Great question — Clause 31 of Form 3CD (related to Sections 269SS/269T) often causes confusion, especially in cases involving closely held companies and directors.

Let’s clarify your query step-by-step:

🔍 Query Summary:

• Company received a loan via NEFT from a director.

• Director holds 99% shareholding.

• You’re asking:

  • Is this transaction reportable under Clause 31 of Form 3CD (specifically 269SS)?

  • Or is it exempt because director and company are "one and the same"?

✅ 1. What Clause 31 and Section 269SS Say

📌 Section 269SS:

No person shall take or accept any loan or deposit of ₹20,000 or more otherwise than by an account payee cheque, demand draft, or electronic clearing system (e.g., NEFT/RTGS), from any person.

💡 Exceptions:

• Transactions with government, banking institutions, and certain relatives (in some contexts).

📌 Clause 31(a) of Form 3CD:

Requires disclosure of all loans or deposits of ₹20,000 or more accepted during the year, regardless of whether they comply or not with 269SS, including:

• Name, PAN, mode of transaction, etc.

✅ 2. Does it Apply to Director?

Yes. A director, even with 99% shareholding, is legally a separate person from the company.

A private limited company and its directors/shareholders are separate legal entities in the eyes of law and taxation.

So:

• Any loan/deposit taken from a director is covered under Section 269SS.

• The mode of transaction (NEFT) ensures no violation, but the transaction still needs to be reported under Clause 31.

✅ Answer: Yes, it is reportable in Clause 31(a) of Form 3CD.

✅ 3. Summary of Treatment

🔎 Important Notes:

• You only report the transaction. Since NEFT is compliant, there is no violation, hence no penalty under Section 271D.

• Include all relevant details like:

  • Name of lender (director)

  • PAN

  • Amount

  • Mode (NEFT)

  • Date of transaction

✅ Final Answer:

Yes, the NEFT-based loan taken from the director (even if he holds 99%) must be reported under Clause 31(a) of Form 3CD, since director and company are not the same person legally.
There is no exemption from reporting just because of majority shareholding.