Circular No. 522

384. Monetary ceilings prescribed in section 40A(3)/269SS/269T - Raised to Rs. 10,000, Rs. 20,000 and Rs. 20,000, respectively, by Direct Tax Laws (Amendment) Act, 1987 - Clarification regarding effective date of change in monetary ceilings

What this is

Circular No. 522 was issued by the Central Board of Direct Taxes on 18 August 1988. Its subject is 384. Monetary ceilings prescribed in section 40A(3)/269SS/269T - Raised to Rs. 10,000, Rs. 20,000 and Rs. 20,000, respectively, by Direct Tax Laws (Amendment) Act, 1987 - Clarification regarding effective date of change in monetary ceilings.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Fixes the date from which the raised cash transaction ceilings bite. The Direct Tax Laws (Amendment) Act, 1987 raised the ceiling in section 40A(3) from Rs. 2,500 to Rs. 10,000, and in each of sections 269SS and 269T from Rs. 10,000 to Rs. 20,000, the changes being made effective from 1 April 1989 by section 1(2) of that Act. The Board clarifies that the amended sections 269SS and 269T apply to payments or repayments made on or after 1 April 1989, while for disallowance under section 40A(3) the amendment applies to payments made in the previous year relevant to assessment year 1989-90 and subsequent years.

Why it was issued

A number of representations were received on the date from which the amended sections apply.

Who it reaches

Businesses making cash payments around the change of the ceiling
Persons accepting or repaying loans and deposits in cash
Assessing Officers making disallowances under section 40A(3)
Officers levying penalty for breaches of sections 269SS and 269T

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.1	s.1
s.40A	s.29, s.36
s.269SS	s.2, s.185, s.189

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

384. Monetary ceilings prescribed in section 40A(3)/269SS/269T - Raised to Rs. 10,000, Rs. 20,000 and Rs. 20,000, respectively, by Direct Tax Laws (Amendment) Act, 1987 - Clarification regarding effective date of change in monetary ceilings
1. Provisions of sections 40A(3), 269SS and 269T have been amended by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988) and consequently the monetary ceilings prescribed under the aforesaid sections have been raised from Rs. 2,500 to Rs. 10,000, Rs. 10,000 to Rs. 20,000 and Rs. 10,000 to Rs. 20,000, respectively. As per provisions of section 1(2) of the Direct Tax Laws (Amendment) Act, these changes have been made effective from 1-4-1989.
2. Board has received a number of representations regarding the date of applicability of the abovementioned amended sections of the Income-tax Act. It is hereby clarified that the amended provisions of sections 269SS and 269T will apply to payments or repayments made on or after 1-4-1989. In respect of disallowance of payments made under section 40A(3), the amendment will apply to payments made in the previous year relevant to the assessment year 1989-90 and subsequent years.
Circular : No. 522, dated 18-8-1988.

What to watch

The two tests differ: sections 269SS and 269T go by the date of the payment or repayment, while section 40A(3) goes by the previous year, so a payment made before 1 April 1989 in the previous year relevant to assessment year 1989-90 still gets the higher ceiling.
The ceilings in all three sections have been revised since, and section 40A(3) now also turns on the mode of payment, so use the limit in force for the year in issue.
Only the ceilings changed; the exceptions and the consequences of breach are governed by the sections and the rules as they then stood.

Where you meet it

In an assessment or penalty proceeding on cash payments or loan repayments made around the change of the ceilings.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 70/2026 [F. No. 500/Misc./S10(23FE)/FT&TR-II] / SO 2768(E) : Infrastructure Sub-sector Businesses Notified under Schedule V — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 1 June 2026
Notification No. 17/2023 [F. No. 500/05/2018-FT&TR-III] — Ministry of Finance 6 April 2023
Circular No. 22/2022 — Condonation of delay under section 119 2 b of the income tax act 1961 in filing of form no.10a 1 November 2022
Circular No. 41/2016 — Circular No.41 of 2016 21 December 2016
Notification No. 98/2016 [F. No. 149/144/2015-TPL (Part-II)] / S.O. 3289(E) — [To BE Published in the Gazette of INDIA, Extraordinary, Part-ii, section 3, Sub-section (ii)] 25 October 2016
Notification No. 7/2016 [F.No.173/394/2015-ITA-I] / SO 529(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 19 February 2016

← Circular No. 523 · Circular No. 521 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.