BooksIQNo person can accept any loan, deposit, or specified advance of ₹20,000 or more in cash — payment must come through account-payee cheque, demand draft, banking channel, ECS, or a prescribed digital mode.
Key points
- This applies to any person accepting a loan, deposit, or specified sum — where 'specified sum' includes any advance received on transfer of immovable property.
- The threshold is ₹20,000 in cash, taken either singly OR in aggregate considering any existing outstanding balance with the same lender.
- Permitted modes are account-payee cheque, account-payee bank draft, ECS, banking channel, or any digital mode prescribed under Rule 6ABBA (UPI, IMPS, RTGS, NEFT, BHIM-UPI, credit card, debit card, Aadhaar Pay and similar).
- The penalty under §271D is 100% of the loan or deposit accepted in violation.
- The carve-outs are narrow — government, banking companies, government companies, and certain notified entities.
Reference: §269SS, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §185
This page is general information for Indian businesses, current as of the
financial year shown above — not legal or tax advice. Tax law changes,
and how a provision applies depends on your specific facts. Confirm the
current position with a qualified professional before you act.
Stop looking up sections. Ask your own books.
BooksIQ answers tax, GST and compliance questions from your actual Tally data — in plain English or Hindi.
See how it works