TaxTMI 
TaxTMI 
TaxTMI 
Section 269T of the Income-tax Act, 1961 : Clause 189 of Income Tax Bill, 2025 Vs. Explanation to Section 269T of the Income-tax Act, 1961
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....", and "specified advance". These definitions are foundational for the operation of the substantive provisions that regulate the manner in which payments and repayments are to be effected, with the broader objective of curbing tax evasion and promoting transparency in high-value transactions. Section 269T of the Income-tax Act, 1961, along with its Explanation, is a long-standing provision aimed at regulating the mode of repayment of loans, deposits, and specified advances, particularly in relation to immovable property, by mandating non-cash modes of repayment for sums above a specified threshold. The Explanation to Section 269T provides definitions for terms like "banking company", "co-operative bank", "primary agricultural credit societ....
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....se of unaccounted money in the economy, particularly in real estate and large-value financial transactions. The evolution of Section 269T and its associated definitions reflects a gradual tightening of the regulatory framework, with the aim of increasing transparency and traceability in financial dealings. Detailed Analysis of Clause 189 of the Income Tax Bill, 2025 1. Definition of "Banking Company" * Clause 189(a): "Banking company" means a company to which the provisions of the Banking Regulation Act, 1949 apply and includes any bank or banking institution referred to in section 51 of that Act. * Analysis: The definition aligns with a well-established legislative practice of referencing the Banking Regulation Act, 1949, as the prin....
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....ions or thresholds often apply to transactions involving these institutions, recognizing their unique role in the financial ecosystem. * Potential Issues: The reliance on cross-references necessitates that the definitions in section 149(6) are robust and up-to-date. Any ambiguity or change in section 149(6) would directly impact the interpretation of Clause 189(b). 3. Definition of "Specified Sum" * Clause 189(c): "Specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. * Analysis: This is a broad definition designed to cover all forms of monetary receipts linked to a proposed transfer of immovable property, regardles....
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....ons that restrict the mode of repayment of advances linked to immovable property transactions. It ensures that all forms of advances, regardless of nomenclature, are subject to anti-evasion controls. * Potential Issues: The distinction between "specified sum" and "specified advance" may create interpretative complexity, especially in cases where a payment could arguably fall within both definitions. The legislative rationale for maintaining two separate definitions, as opposed to a unified definition, may require further elucidation. Comparative Analysis with Explanation to Section 269T of the Income-tax Act, 1961 1. "Banking Company" * Section 269T Explanation (i): Refers to the definition in clause (i) of the Explanation to section ....
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....e intent to maintain continuity. Both provisions are designed to capture all advances linked to property transfers, regardless of nomenclature or the ultimate completion of the transaction. 4. "Specified Sum" * Section 269T: The term "specified sum" is not separately defined in the Explanation to Section 269T, but the operative provision refers to "specified advance" and "loan or deposit". * Comparison: Clause 189 introduces the term "specified sum" as a defined term, broadening the scope beyond "specified advance". This may be intended to capture not just advances but any monetary receipt linked to property transfers, including consideration paid in forms other than advances (e.g., final payments, compensation for failed transfers). T....
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....-identical definitions of "banking company" and "specified advance" ensure continuity for stakeholders familiar with the 1961 Act, minimizing transitional compliance burdens. * Expansion: The introduction of "specified sum" as a defined term in Clause 189 potentially expands the regulatory scope to cover a wider range of monetary receipts linked to property transfers. * Clarity vs. Complexity: The use of multiple defined terms ("specified sum", "specified advance") may provide clarity in some cases but could also introduce complexity, especially where the boundaries between the terms are not clearly delineated. * Adaptability: The reliance on cross-references allows the definitions to remain adaptable to changes in related statutes bu....