You heard it right. You can pay your entire loan to any
housing finance company or even a non-banking finance company. But, the cash in each instalment should be less than Rs 2 lakh.
As per the new guidelines, cash payments/receipts of or over Rs 2 lakh are illegal and will attract penalty.
The finance ministry has stated prohibition of cash payment would only apply to repayment of a single loan instalment in cash and not to the aggregate amount.
Under Section 269ST, any person to receive amount of Rs 2 lakh and above in cash is prohibited.
A circular by the
income tax department states receipt of repayment of loan by the Non-Banking Finance Companies (
NBFC) and
Housing Finance Companies (HFC) will fall under the purview of section 269ST clause (b) if the repayment of 'one' loan instalment is equal to or above Rs. 2 lakh.
All the instalments paid for a loan shall not be aggregated for the purposes of determining applicability of the provisions of section 269ST.