Income Tax New Rules: Those that live during Corona typically struggle with money issues. People lend a hand financially to friends and family in such circumstances. However, did you know that it is illegal to lend more than Rs 20,000 in cash to a taxpayer under Section 269SS of the Income Tax?
Section 269SS of the Income Tax Act
The Income Tax Act of 1961’s Section 269SS states that no one may accept a cash deposit or loan of more than Rs 20,000 into their account from another individual. Only electronic transfers should be made for this. A violation of Section 269SS is a criminal offence, as stated in Section 271D of the Code.
Points To Remember
- Only lend the amount that is within your means. Overextending your credit limit can have serious consequences.
- Don’t lend if there aren’t any good reasons to do so; just lend when there are.
- Never obtain signatures or other information on plain paper and then discard it.
- Lend money only if you are confident your friends and family will be able to repay it.
Bank Scrutiny on Large Cash Deposits
If you lend money to a friend or relative and they return a large sum of it, the bank might examine you. You can get a loan agreement established to prevent any further disputes. This should include your information, the loan amount, the payback schedule, and all other terms. You can readily provide the bank with information in the future in this way.