Sections 269SS and 269T of the Finance Bill 2023 propose to amend Sections 269SS and 269T to increase the threshold limit for levy of penalty for cash loans/transactions by certain Cooperative Societies, namely PACS and PCARDBs, from Rs. 20,000 to Rs. 2 Lac.
Section 269SS is proposed to be amended to provide that if a deposit is accepted by a Primary Agricultural Credit Society (PACS) or a Primary Co-operative Agricultural and Rural Development Bank (PCARD) from its member in cash, or a loan is taken from a PACS or a PCARD by its member in cash, no penalty is imposed if the amount of such loan or deposit in cash is less than Rs. 2 lacs, as opposed to the current limit of Rs. 20,000.
Furthermore, section 269T is being amended to provide that no penalty will be imposed if a PACS or PCARD pays a deposit to its member or a loan is repaid to a PACS or PCARD in cash if the amount of such loan or deposit in cash is less than Rs. 2 lacs, as opposed to the existing limit of Rs. 20,000.
1. According to Section 269SS of the Income Tax Act, no person shall take any loan or deposit from any person other than by account payee cheque, account payee demand drafts, or online transfer through a bank account, if the amount of such loan or deposit is Rs. 20,000 or more. Similarly, Section 269T of the Income Tax Act states that no loan or deposit of Rs. 20,000 or more shall be repaid in any other way than by an account payee cheque, account payee demand drafts, or online transfer through a bank account. However, certain exceptions have been specified in the provisions.
2. The Finance Bill 2023 proposes to give PACS and PCARD parity for cash transaction limits with banking companies under sections 269SS and 269T of the Income Tax Act because they are involved in granting loans and accepting deposits from the rural segment. Existing provisions state that anyone, including PACS and PCARD, is subject to a penalty for accepting a loan or deposit in cash in excess of Rs. 20,000 under Section 269SS, and for repaying a loan or deposit in cash in excess of Rs. 20,000 under Section 269T. Because PACS and PCARD provide credit at the grassroots level, they should be given some flexibility under the aforementioned provisions.
3. To provide relief to low-income groups (PACS/ PCARDB) and make it easier for them to conduct business in rural and remote areas, an amendment to section 269SS of the Income Tax Act is proposed, raising the limit from Rs. 20,000 to Rs. 2 lakh. It is also proposed to amend the provisions of section 269T of the Income Tax Act, raising the limit for PACS and PCARDB from Rs. 20,000 to Rs. 2 lakh.
4. This amendment will ensure that where a PACS or a PCARDB accepts a deposit from a member or where a loan is taken from a PACS or a PCARDB by a member, the penalty will be levied only when the loan or deposit amount is Rs. 2 lakh or more in cash. As a result, if a PACS or a PCARDB pays a deposit to a member or a loan is repaid to a PACS or a PCARDB by a member, the payment must be made by an account payee cheque, account payee bank draft, or online transfer through a bank account if the amount of the loan or deposit exceeds Rs. 2 lakh.
5. These changes will go into effect on April 1, 2023.
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