Clause-31(C) – Section 269T

Clause-31(C) – Section 269T

Clause 31(c) of the tax audit report in Form No. 3CD requires the auditor to submit various information regarding compliance with Section 269SS and 269T, in various sub-clauses (i.e., sub-clause 31(a), 31(b), 31(c), 31(d) and 31(e)). 

Section 269T of the Income Tax Act prohibits an individual from repaying the deposit or specified sum, or loan otherwise than by a bank draft of an account payee or account payee cheque or through the electronic clearing system of a bank account, if:

(a) The deposited amount of the deposit or loan, including the interest amount, is Rs. 20,000 or more, or,
(b) The total sum of the deposit or loan, adding the interest amount held by an individual in their name or with some person (jointly), is Rs. 20,000 or more.

Step -1  - Ledger Selection 

1. The system populates ledgers that are classified as “Unsecured Loans” - (a) Banks and Financial Institutions, (b) Directors, (c) Friends & Relatives & (d) Shareholders with transactions > Rs. 20,000
2. The system also lists to the user all ledgers that are present in AssureAI for the client to add to the report
3. Any ledger added in step -1 manually by the user in the first year will be saved and listed in the second year onward.
4. User can also provide details like Name of the Payee, PAN and Address, for each ledger which are not mandatory

Step -2 - Report Compilation

• The system scans all ledgers added in Step 1 and identifies repayment transactions that may be reportable under Section 269T. The system considers not only the individual repayment amount but also factors such as:
  1. Aggregate repayments made to the same party on the same day.
  2. Outstanding loan/deposit balance existing immediately before the repayment.
  3. Transactions that may become reportable when considered together with same-day repayments or the outstanding balance.
• For each reportable transaction, the system displays:
  • Amount of Repayment – Repayment amount identified for reporting.
  • Maximum Outstanding Amount – Highest outstanding credit balance in the ledger during the relevant period.
  • Repayment by Cheque or Bank Draft? No for cash transactions. Yes for bank transactions.
  • Repayment by an Account Payee Cheque or Account Payee Bank Draft? – For bank transactions, this value may be specified using the toggle provided.

Note: Repayment transactions may be identified as reportable even when the individual repayment amount is below ₹20,000, if the reporting thresholds under Section 269T are triggered after considering same-day aggregate repayments or the outstanding loan/deposit balance immediately before the repayment.