if an assessee taken an unsecured loan form any party say Rs.500000 and he wants to pay in cash as monthly installment s can he do?
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Unsecured loans & advances
Replies (6)
Dear Sachin
As per exception Rule 6DD of Section 40A(3) :
Advancing of loans or repayment the principal amount of the loan do not constitute expenditure deductible in computing the taxable income. However, interest payments made in contravention of provisions of Section 40A(3) are disallowable, as interest is a deductible expenditure-Press Note : Dated 2-5-1969, issued by Ministry of Finance.
Also, Where the payment was made partly in cash and partly by way of post-dated cheques, Section 40A(3) will apply only if the cash payment exceeded the prescribed limit .
Hope it clears your doubts.
For further reference, check the point No. 9 in below mentioned link :
https://www.simpletaxindia.net/2013/09/disallowance-of-cash-payments-exceeding.html
Regards
The above case is covered by section 269T-repayment of loan or deposit in cash. repayment of loan or deposit taken cannot be paid in cash in excess of Rs.20000.00.
The limit of Rs.20000 is for whole year and not single transaction.
40A(3) is not applicable for above case
The same transaction is covered by Sec 269-T where repayment of loan exceeding Rs. 20000/- in cash is not permitted. Hence, this would not be repayable in cash even if the instalment amount is less than Rs. 20000/-.
only cheque payment is allowed under section 269t
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