EMI Tips: Are you paying EMI for a relative with cash? You may face big trouble..

If you pay the loan installment (EMI) through cash of more than Rs 20,000 in your bank account, then it can come under the radar of the tax department. Many times, people take loans for relatives, and that relative deposits the EMI amount in your account in cash, but this method is not correct and can even lead to a penalty.

Will this be considered your income?
If a relative deposits cash in your account to pay EMI, then it will not be considered your income. This is only the repayment of the loan that you have given to the relative. Therefore, you will not be taxed.

Where is the problem?
According to section 269SS, taking any cash loan of more than Rs 20,000 is prohibited. If this happens, then a penalty of the same amount can be imposed on the relative. Under section 269T, returning the loan in cash is also prohibited. If EMI is deposited in cash, then the tax department can impose a penalty if caught.

Why is an income tax return necessary?

Even if your tax is zero, it is necessary to file an Income Tax Return (ITR) if your income is more than the basic exemption limit.

Exemption limit in old tax regime: 2.5 lakhs (below 60 years), 3 lakhs (senior citizens), 5 lakhs (super senior citizens).

Exemption limit in the new tax regime: 3 lakhs for all

Depositing cash in the bank for EMI may seem easy, but it is against the tax law. To avoid a penalty, always use digital or bank transfer and file your income tax return on time.

Disclaimer: This content has been sourced and edited from Amar Ujala. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.