Clause 31(c) of Form 3CD: Loan Repayment Reporting Under Section 269T (AY 2026-27)

Clause 31(c) of Form 3CD requires the tax auditor to report specified repayments of loans, deposits and specified advances that fall within Section 269T. For AY 2026-27, the practical question is not simply whether a repayment exceeded ₹20,000. The auditor must examine the amount being repaid, interest payable, the aggregate balance outstanding on the repayment date, the identity of the recipient and the mode of repayment. Where Section 269T applies, repayment generally has to move through an account-payee cheque or bank draft, electronic clearing system through a bank account, or another prescribed electronic mode.

This article is a focused companion to our Form 3CD Clause 31 guide, which covers Sections 269SS, 269ST and 269T together. Here, the focus is only on repayment reporting under Clause 31(c) and the audit work needed to support it.

What does Clause 31(c) of Form 3CD require?

Clause 31(c) is the repayment-side disclosure within the broader Clause 31 framework. It is designed to make repayments covered by Section 269T visible in the tax audit report. The auditor should therefore begin with the complete population of loan, deposit and specified-advance ledgers, identify repayments during FY 2025-26, and test whether the statutory threshold and mode conditions are attracted.

The reporting exercise should not be reduced to a scan of cash-book entries. A repayment can require review because of the outstanding balance or interest attached to the account even where the amount physically paid on one date appears modest. That is why a lender-wise or depositor-wise reconciliation is usually more reliable than a voucher-only review.

Section 269T threshold: when does the ₹20,000 test apply?

For ordinary cases, Section 269T is triggered where any of the statutory tests reaches ₹20,000 or more. The law looks at: (1) the loan, deposit or specified advance being repaid together with interest payable; (2) the aggregate loans or deposits held with the person on the date of repayment together with interest; or (3) the aggregate specified advances held on that date together with interest.

Accordingly, splitting a larger outstanding balance into smaller repayment entries does not automatically take the transaction outside Section 269T. The threshold analysis has to be performed with the statutory aggregation rules in mind.

There is a special higher ₹2 lakh threshold for specified transactions involving a primary agricultural credit society or a primary co-operative agricultural and rural development bank and its member. Businesses should therefore avoid applying the ₹20,000 rule mechanically without first identifying whether this statutory special case is relevant.

Permitted modes of repayment under Section 269T

Where Section 269T applies, repayment should ordinarily be made by an account-payee cheque, account-payee bank draft, electronic clearing system through a bank account, or another prescribed electronic mode. The section also contains specific exclusions, including certain repayments involving Government, banking companies, post-office savings banks, co-operative banks, statutory corporations, Government companies and notified institutions.

For tax-audit purposes, the documentary question is therefore two-fold: was the repayment within Section 269T, and if yes, was the actual mode one permitted by the section? A bank narration alone may not always establish whether a cheque or draft was account-payee, so supporting banking evidence should be retained where that distinction matters.

What should the auditor capture for Clause 31(c)?

A robust Clause 31(c) working paper should be recipient-wise and should allow the final Form 3CD disclosure to be traced back to the ledger and bank evidence. In practice, the file should capture at least the following information:

• Name and address of the lender, depositor or person who paid the specified advance.

• PAN or Aadhaar details where required and available for reporting.

• Nature of the balance: loan, deposit or specified advance.

• Amount of repayment made during the previous year.

• Maximum amount outstanding in the account during the previous year where relevant to the prescribed reporting fields.

• Interest payable on the balance when applying the Section 269T threshold test.

• Date and mode of each repayment.

• Whether a cheque or bank draft used for repayment was account-payee.

• Supporting bank statement, ledger and confirmation or agreement references.

Worked example: ₹15,000 repayment can still require Section 269T review

Example: ABC & Co. has an unsecured loan from Mr X. On 10 August 2025, the outstanding principal is ₹32,000 and interest payable is ₹2,000. ABC & Co. repays ₹15,000 in cash.

Looking only at the ₹15,000 cash payment would give the wrong answer. Section 269T also tests the aggregate loan or deposit outstanding on the repayment date together with interest. Because the relevant aggregate is ₹34,000, the statutory threshold is crossed. The mode of repayment must therefore be tested against Section 269T, and the transaction should be considered for Clause 31(c) reporting.

Audit implication: the working paper should show the opening balance, further credits or interest, the balance immediately before repayment, the repayment amount and mode, and the post-repayment balance. This prevents the threshold test from being distorted by looking at isolated vouchers.

Clause 31(c) audit reconciliation: a practical 8-step process

• Extract all loan, deposit and specified-advance ledgers for FY 2025-26.

• Map each counterparty to PAN/Aadhaar and supporting agreement or confirmation records.

• Identify every debit or repayment entry, including journal entries that may ultimately represent settlement.

• Compute the balance and interest outstanding on each repayment date.

• Apply the Section 269T threshold tests, including the relevant aggregation rule.

• Verify the payment mode from bank statements and cheque or payment records.

• Investigate repayments routed through cash, bearer instruments, partner/current accounts or set-off arrangements instead of assuming they are compliant.

• Reconcile the final Clause 31(c) population to the Form 3CD disclosure and retain an exception list for management representation.

Clause 31(c) vs other parts of Clause 31

Clause 31 is broader than loan repayment. The acceptance side of loans, deposits and specified sums is principally linked to Section 269SS, while cash-receipt restrictions under Section 269ST are a different statutory test. Clause 31(c) should therefore not be used as a catch-all disclosure for every cash transaction.

For the complete architecture, use our Clause 31 pillar covering Sections 269SS, 269ST and 269T. You can also review the Form 3CD clause list for AY 2026-27 to understand where Clause 31 sits within the wider tax-audit reconciliation process.

Common mistakes in Clause 31(c) reporting

• Testing only the amount paid on a single voucher and ignoring aggregate outstanding balance and interest.

• Reviewing only cash payments and overlooking non-account-payee instruments or unusual settlement modes.

• Treating every bank transfer as automatically compliant without verifying the nature of the electronic mode where needed.

• Ignoring specified advances connected with transfer of immovable property.

• Omitting interest payable while applying the statutory threshold.

• Failing to reconcile loan ledgers with confirmations, bank statements and financial-statement schedules.

• Assuming that a disclosure in Form 3CD itself cures a Section 269T contravention. Reporting and substantive compliance are separate questions.

Penalty exposure under Section 271E

A repayment made in contravention of Section 269T can attract penalty under Section 271E equal to the amount of the loan, deposit or specified advance repaid in violation of the section. This makes seemingly small process failures potentially material. The tax audit file should therefore distinguish a mere documentation gap from an apparent substantive breach and escalate exceptions before the report is finalised.

Section 273B provides a reasonable-cause protection for specified penalties, including Section 271E. That does not mean a penalty is automatically waived: the taxpayer must be able to demonstrate reasonable cause on the facts and preserve evidence supporting that position. Professional advice should be taken before relying on this relief in a live dispute.

Finance-team checklist before sharing data with the tax auditor

• Download counterparty-wise loan and deposit ledgers for the full year.

• Prepare a repayment register with date, amount, mode and bank reference.

• Calculate interest accrued or payable up to each repayment date.

• Flag cash repayments and non-account-payee cheque or draft transactions immediately.

• Identify property-related advances that fall within the definition of specified advance.

• Obtain PAN/Aadhaar and current addresses of relevant counterparties.

• Reconcile year-end balances with confirmations and financial statements.

• Document any claimed statutory exclusion or special threshold with supporting evidence.

FAQs on Clause 31(c) of Form 3CD

1. Is every loan repayment above ₹20,000 reportable?

The analysis is not based solely on one repayment amount. Section 269T contains multiple threshold tests involving the repayment amount, interest and aggregate balances. The auditor should first establish whether the section applies and then complete the prescribed Clause 31(c) reporting.

2. If only ₹10,000 is repaid in cash, can Section 269T still apply?

Yes. If the aggregate loan or deposit outstanding on the repayment date together with interest is ₹20,000 or more, the threshold can still be crossed even though the particular cash repayment is below ₹20,000.

3. Does Section 269T cover advances for property?

Yes. The section defines a specified advance as money in the nature of an advance relating to transfer of immovable property, whether or not the transfer ultimately takes place.

4. Is disclosure in Form 3CD enough if the repayment mode was wrong?

No. Form 3CD reporting does not regularise a contravention. The substantive Section 269T position and any penalty exposure under Section 271E have to be considered separately.

5. What is the tax-audit deadline for AY 2026-27?

For ordinary tax-audit cases for AY 2026-27, the current reporting calendar should be checked against the applicable statutory due date and any later CBDT extension. See our Tax Audit AY 2026-27 forms and deadline guide for the broader filing framework.

Practical takeaway

Clause 31(c) is a balance-and-mode reconciliation, not a cash-voucher checklist. The safest approach is to test every relevant repayment against the Section 269T aggregation rules, preserve counterparty and banking evidence, and resolve exceptions before Form 3CD is signed. That produces a cleaner audit trail and reduces the risk of an avoidable Section 271E controversy.

PGT & Associates assists businesses with tax-audit readiness, Form 3CD reconciliations and transaction-level compliance reviews. This article is general information and should not be treated as advice for a specific transaction or dispute.