Provisions of section 269T of the Income-tax Act, 1961-Regarding - Income Tax - 479/1987

Provisions of section 269T of the Income-tax Act, 1961-Regarding Circular No. 479 Dated 16/1/1987 To All Chief Commissioners (Admn.) and Commissioners of Income-tax. Sir, Subject: Provisions of section 269T of the Income-tax Act, 1961-Regarding. Indian Banks' Association had sought a clarification as to whether the payment in cash of periodical interest amount alone exceeding Rs. 10,000 would attract the provisions of section 269T of the Income-tax Act. This section provides that no company, co-operative society or firm shall repay and deposit otherwise than by an account payee cheque or account payee bank draft where the amount of deposit or the aggregate of the amount of deposit together with any interest is Rs. 10,000 or more. 2. The matter has been examined in consultation with the Ministry of Law. The Board has been advised that the payment of interest of Rs. 10,000 or more, will have to be made in the manner provided in section 269T of the Income-tax Act, 1961. So far as the repayment of deposit together with any interest is concerned, there is no room for doubt. If the amount of repayment after including the interest is Rs. 10,000 or more, the provisions of section 269T of the Income-tax Act would be attracted. This is because the interest accrued on the deposit and credited to the account periodically or otherwise partakes of the character of a deposit and as such becomes a deposit itself. 3. These instructions may please be brought to the notice of all the officers working under you. 4. Hindi version will follow shortly. Yours faithfully, (Sd.) Y.K. Batra, Under Secretary to the Government of India.