269SS, 269T and 269ST: Three Sections That Do Not Work Alike

The cash sections are unusual among the provisions a tax auditor tests, because the penalty is not a percentage of tax. It is the amount itself.

Sections 271D and 271E impose a penalty equal to 100% of the loan, deposit or receipt that breached section 269SS, 269T or 269ST. Not the tax on it. The whole sum. A ₹6,00,000 cash loan repaid in cash can produce ₹12,00,000 of penalty across the two ends of it.

That asymmetry is why these sections deserve more care than their apparent simplicity suggests.

Three sections, three different tests

They are habitually grouped and they do not work the same way.

269SS — taking a loan or deposit. No person shall accept a loan, deposit or specified sum of more than ₹20,000 other than by banking channel. The test is per transaction.

269T — repaying it. The mirror image, on repayment, at the same limit. A perfectly compliant borrowing repaid in cash is a fresh violation at the other end.

269ST — receiving anything at all. No person shall receive ₹2,00,000 or more in cash. And this one has a different aggregation entirely: it bites on a receipt from one person in one day, on a single transaction, or on receipts relating to one event or occasion.

That last distinction does real work. Under 269SS the limit is per transaction, so splitting a loan into three receipts of ₹15,000 across three days is three separate transactions each under the limit. Under 269ST, three cash receipts of ₹80,000 from the same customer on the same day is ₹2,40,000 received from a person in a day, and the splitting is exactly what the section was written to catch.

The NBFC trap

Here is the point that produces more wrong answers than any other in this area.

Loans from a banking company are outside 269SS and 269T. Everyone knows this, and it is correct.

But the exemption is for a banking company, and a non-banking financial company is not one. A vehicle loan from a finance company, a housing loan from a home-finance company, a term loan from a well-known NBFC — none of these are outside the sections merely because a large regulated institution is on the other side of them.

The exemption follows what the lender is, not how familiar its name sounds.

This is easy to get wrong from a ledger, because clients park NBFC loans under Secured Loans alongside genuine bank facilities, and a review that trusts the group placement will exempt them all. The group tells you where the client filed it. It does not tell you whether the lender was a banking company.

Why merging parties changes the answer — in one section only

A subtle point, and it matters if you ever consolidate ledgers for the same party.

Firms often maintain one party across two or three ledgers — a spelling variant, a branch suffix, an old account never closed. When you conclude those are one person, that conclusion affects the three sections differently.

For 269ST, it can change the outcome. The section tests what was received from a person in a day, so once two ledgers are one person, their cash receipts on the same day combine, and two amounts under ₹2,00,000 can become one above it.

For 269SS and 269T, it cannot. The limit there is per transaction, so combining ledgers changes how the disclosure reads but can never create or erase a violation.

Which is why merging parties should never be automatic. Similar names can be genuinely different people, and a grouping made for one purpose must not silently rewrite a disclosure made for another.

How Audcrix runs it

Audcrix builds a register rather than a verdict, because the register is what a 3CD clause 31 working paper actually needs.

• Every receipt at or above ₹2,00,000 is registered, mode-wise — not only the breaches. A register of everything tested is evidence; a list of only the failures is an assertion.
• Banking companies are excluded and NBFCs are not. Lender identity is resolved from the ledger rather than assumed from the Tally group it sits under.
• Party bars are per ledger by default. Ledgers combine only when a CA explicitly declares them one party, and that declaration then flows through the 269ST day aggregation, the party bars and the clause 31 rows from one place.
• Loans given are registered separately, for reporting rather than as a violation — a lender is not the person the section penalises.
• Nothing is silently dropped. Where a register would run past its display cap, the remaining rows are counted and reported as truncated rather than quietly omitted.

The design principle underneath all of it: a cash section with a 100% penalty is not a place for an inferred answer. Every row should say what it is, which ledger it came from, and why it was or was not in scope.

Audcrix is audit and compliance intelligence for Indian CA firms — ledger and voucher scrutiny across the whole population, never a sample. See how it works.