Clause 31(a) of Form 3CD: Loan & Deposit Reporting Under Section 269SS (AY 2026-27)
Updated: Sep 28
CBDT changed the AY 2026–27 due dates on 28 September: for the specified ordinary audit category, the report moved from 30 September to 21 October 2026 and the related ITR moved from 31 October to 21 November 2026. Form 3CEB remains separate. Official Income Tax Department announcement
Clause 31(a) of Form 3CD requires the tax auditor to report prescribed particulars of loans, deposits and specified sums taken or accepted where Section 269SS is attracted. For AY 2026-27 (FY 2025-26), the ordinary threshold is ₹20,000, but the test is not limited to one cash receipt: outstanding amounts from the same depositor and the combined balance must also be examined. This makes Clause 31(a) of Form 3CD a reconciliation exercise, not merely a cash-book check.
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Clause 31(a) of Form 3CD: What Does It Cover?
Clause 31(a) sits within the Form 3CD reporting framework for loans, deposits and specified sums accepted by an assessee. Its practical purpose is to identify transactions that need scrutiny under Section 269SS and to place the relevant particulars before the tax authorities through the tax audit report. The auditor should therefore reconcile the books, counterparty balances and modes of receipt rather than relying only on the year-end loan schedule.
For the wider framework covering Sections 269SS, 269ST and 269T, see our Form 3CD Clause 31 guide.
Section 269SS: The ₹20,000 Test Has Three Parts
Section 269SS prohibits taking or accepting a loan, deposit or specified sum otherwise than through permitted banking or prescribed electronic modes when any of the following tests reaches ₹20,000 or more:
The amount, or aggregate amount, of the new loan, deposit or specified sum is ₹20,000 or more.
On the date of acceptance, an earlier loan, deposit or specified sum from the same depositor remains unpaid and the outstanding amount or aggregate outstanding is ₹20,000 or more.
The new amount together with the earlier unpaid amount from that depositor reaches ₹20,000 or more.
This third test is frequently missed. A fresh receipt below ₹20,000 can still fall within Section 269SS if an earlier balance from the same person causes the combined amount to reach the threshold.
Worked Example: Why a ₹10,000 Receipt Can Still Trigger Section 269SS
Assume a business already has an unpaid loan balance of ₹12,000 from Mr A. During FY 2025-26 it accepts another ₹10,000 in cash from the same person. The new receipt by itself is below ₹20,000, and the old balance by itself is also below ₹20,000. However, the combined amount is ₹22,000. The Section 269SS test is therefore crossed, and the acceptance mode becomes relevant for Clause 31(a) reporting and compliance review.
What Is a Loan, Deposit or “Specified Sum”?
Section 269SS applies to loans and deposits of money. It also covers a “specified sum”, which the statute defines as money receivable, whether as an advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer ultimately takes place. Accordingly, property-related advances should not be ignored merely because they do not appear in an unsecured-loan ledger.
Permitted Modes of Acceptance
Where Section 269SS is attracted, the acceptance should be through an account-payee cheque, account-payee bank draft, electronic clearing system through a bank account, or another prescribed electronic mode. Finance teams should retain bank statements and transaction references so the mode can be established during tax audit. A generic narration such as “bank receipt” is weaker evidence than a traceable bank entry tied to the counterparty ledger.
Important Statutory Exceptions
Section 269SS contains specific exceptions. Transactions with or involving the Government, banking companies, post-office savings banks, co-operative banks, statutory corporations, Government companies and notified institutions may fall outside the restriction in the circumstances specified by the provision. There is also an agricultural-income exception where both parties have agricultural income and neither has income chargeable to tax. These are statutory exceptions, not blanket professional assumptions, so the underlying facts should be documented.
A special higher threshold of ₹2 lakh applies for specified transactions between a primary agricultural credit society or primary co-operative agricultural and rural development bank and its members, subject to the statutory conditions. For ordinary taxpayers, the familiar ₹20,000 Section 269SS threshold remains the core rule.
How to Reconcile Clause 31(a) of Form 3CD
A practical audit approach is to begin with the complete population of balances and receipts rather than searching only for cash entries above ₹20,000. The finance team and auditor should work counterparty-wise because Section 269SS expressly considers earlier unpaid amounts from the same depositor.
Extract opening and closing balances of unsecured loans, deposits, security deposits and relevant property advances.
Review all receipts during FY 2025-26 and map each receipt to the correct counterparty ledger.
For each acceptance date, compute the earlier unpaid balance from that same depositor.
Test the fresh amount, the outstanding amount and their combined amount against the applicable threshold.
Verify the mode of receipt from bank statements, cheque details, UTR references or prescribed electronic-mode evidence.
Identify statutory exceptions separately and retain evidence supporting the exception.
Reconcile the final reporting population back to the general ledger, confirmations and tax audit working papers.
Cross-check repayment-side transactions separately under Section 269T instead of mixing them with acceptance-side testing.
For the repayment side, read our Clause 31(c) guide on Section 269T.
Common Clause 31(a) Mistakes
Testing every cash receipt independently and ignoring the depositor’s existing unpaid balance.
Reviewing only unsecured loans and overlooking deposits or immovable-property advances that can qualify as specified sums.
Confusing Section 269SS with Section 269ST. Section 269SS is specifically concerned with loans, deposits and specified sums; Section 269ST is a separate restriction on certain receipts.
Assuming that every non-cash journal or book entry automatically complies without examining the legal character and facts of the transaction.
Relying on year-end balances instead of testing the position on each date on which a relevant amount was accepted.
Treating a possible penalty as an automatic tax-audit conclusion. The auditor reports the relevant facts; the statutory penalty process and any reasonable-cause defence are separate legal questions.
Penalty for Contravention: Section 271D
Section 271D provides that a person who takes or accepts a loan, deposit or specified sum in contravention of Section 269SS can be liable to a penalty equal to the amount so taken or accepted. Section 273B, however, provides that the penalty is not imposable for specified failures, including Section 271D, where the person proves that there was reasonable cause. This distinction matters: a transaction requiring reporting or review should not be described as an automatic final penalty outcome without considering the statutory process and facts.
Clause 31(a) vs Section 269ST vs Clause 31(c)
Clause 31(a) / Section 269SS focuses on taking or accepting loans, deposits and specified sums. Section 269ST deals with a different cash-receipt restriction and has its own statutory tests. Clause 31(c) addresses repayment-side reporting connected with Section 269T. Keeping these populations separate helps avoid both omissions and duplicate reporting.
AY 2026-27 Finance-Team Checklist
Freeze the FY 2025-26 loan and deposit ledgers before tax-audit reconciliation.
Obtain counterparty-wise opening balances and transaction dates, not just closing balances.
Identify cash and non-standard receipt modes from the cash book and bank book.
Flag property advances and other amounts that may qualify as specified sums.
Document exceptions and any special co-operative-society threshold separately.
Retain counterparty confirmations and bank evidence for all material items.
Resolve mismatches before Form 3CD is finalised and uploaded.
FAQs on Clause 31(a) of Form 3CD
Is a cash loan of ₹19,000 always outside Section 269SS?
No. If an earlier amount from the same depositor remains unpaid, the combined test can bring the transaction within Section 269SS even when the fresh receipt is below ₹20,000.
Does Section 269SS cover advances for immovable property?
Yes, the statutory definition of “specified sum” includes money receivable as an advance or otherwise in relation to transfer of immovable property, whether or not the transfer takes place.
Is Section 269SS the same as the ₹2 lakh cash-receipt rule under Section 269ST?
No. They are separate provisions with different subject matter and tests. Section 269SS deals with loans, deposits and specified sums; Section 269ST deals with certain receipts of ₹2 lakh or more.
What is the tax-audit timeline for AY 2026-27?
For FY 2025-26 / AY 2026-27, the existing tax-audit framework under the Income-tax Act, 1961 continues, with Form 3CA or 3CB accompanied by Form 3CD. The ordinary tax-audit report due date is 21 October 2026, subject to the applicable law and any subsequent valid extension. See our AY 2026-27 tax-audit forms and deadline guide.
Authoritative References
Practical Takeaway
The most important control for Clause 31(a) is a counterparty-wise, date-wise reconciliation. Testing only individual cash receipts can miss the statutory aggregation rule. Businesses should reconcile opening balances, fresh receipts, receipt modes, property advances and exceptions before the tax audit is finalised. PGT & Associates can assist businesses with Form 3CD reconciliation, Section 269SS review and supporting tax-audit documentation where professional assistance is required.
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