You can repay your loan that is whole in, provided each installment is less than Rs 2 lakh

by **Admin** Tue Jul 11, 2017 9:55 pm

Going by a tax department circular issued yesterday, any difficulty. you can repay your complete loan add up to any HFC (Housing finance company) or NBFC (Non-banking finance company) in cash provided each installment is less than Rs 2 lakh. In accordance with the income that rules that is brand new in the last spending plan, cash payments/receipts of or higher Rs 2 lakh are unlawful and can attract penalty.

This rule had created confusion as to whether or not the rule applied to single installment repayment of a loan or also the payment amount that is entire. The finance ministry issued a circular dated July 3, 2017, clarifying that the prohibition of money payment would just relate solely to the payment of a loan that is solitary in cash and never to the quantity that is aggregate.

Section 269ST was introduced within the budget that last discourages the use of huge amounts of cash as a step towards controlling the generation of black money.

Section 269ST prohibits any individual to get the quantity of Rs. 2 lakh and above in cash:

(i) In aggregate from an individual on a day that is or

(ii) In a transaction that is or that is single

(iii) In respect of deals connected with one event or occasion from an individual

Though therefore clarity that is giving determining the applicability of section 269ST, from a perspective that is individual she or he needs to steadfastly keep up necessary supporting documents to substantiate any future request from the authorities seeking clarification from the source of cash says Amarpal Chadha, Tax Partner & India Mobility Leader, EY.

Us government has furthermore introduced penalty conditions in the event of part 269ST is violated.

Section 271DA defines the penalty amount up to be paid because of the average person who receives the total quantity of cash in the limit that is specified. The penalty amount based on the law will probably soon add up to the total amount that is total in cash.

Income Tax department in its circular July that is dated 3 2017 has provided a clarification in connection with transactions which will come under the purview of section 269ST in the case repayment of a loan is done cash that is using.

The circular states that receipt of payment of loan due to the boat that is non-Banking businesses (NBFC) and Housing Finance Companies (HFC) will fall under the purview of area 269ST clause (b) in the event that repayment of 'one' loan instalment is comparable to or above Rs. 2 lakh. "all of the instalments taken care of that loan shall not be aggregated for the purposes of determining applicability associated with the conditions of area 269ST." This means that the Rs 2 limitation that is lakh only be put for an individual loan installment repayment in cash rather than into the total of the many installments.

The division has received the representations from NBFCs and HFCs seeking clarification concerning the applicability of section 269ST regarding the repayment of loan whether or perhaps not it will be making use of one installment or regarding the loan amount that is entire.

The circular has clarified that the NBFC or HFC will end up section that is violating only when they receive an individual loan installment in money of or over Rs 2 lakh.

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Source - http://economictimes.indiatimes.com