Section 269T of ITA, 1961 : Section 269T: Mode Of Repayment Of Certain Loans Or Deposits

Explanation using Example

Imagine a scenario where Mr. Sharma has a fixed deposit of INR 50,000 with XYZ Co-operative Bank. After the maturity period, he wishes to withdraw his deposit with the accrued interest. According to Section 269T of the Income-tax Act, 1961, XYZ Co-operative Bank is required to repay Mr. Sharma's fixed deposit and interest either through an account payee cheque or account payee bank draft in Mr. Sharma's name, or by using an electronic clearing system through Mr. Sharma's bank account, since the amount exceeds INR 20,000.

However, if Mr. Sharma also has a savings or current account with XYZ Co-operative Bank, the bank is permitted to credit the amount directly to his account.

It is important to note that if Mr. Sharma had taken the deposit from a government entity, a banking company, or any other entity listed in the provided exceptions, the bank could repay him in cash, regardless of the amount being more than INR 20,000.