Section 189 Income Tax Act 2025: What Do Specified Sum and Specified Advance Mean?
Section 189 supplies four statutory definitions for Chapter XII, which regulates specified modes of accepting money, receiving payments and repaying loans, deposits and property advances.
What is the purpose of Section 189?
Section 189 is headed Interpretation. Its opening words make the definitions applicable for the purposes of Chapter XII, unless the context otherwise requires. It clarifies terms used in the rules on accepting loans, deposits and property-related sums, cash receipts, electronic payment facilities and repayments.
Definitions under Section 189(a) to (d)
Section 189(a): Banking company
A banking company is a company to which the Banking Regulation Act, 1949 applies. The term also includes a bank or banking institution referred to in Section 51 of that Act.
This definition matters when applying the banking-related exceptions and permitted repayment provisions in Chapter XII. Whether a particular institution qualifies must be checked against the applicable law.
Section 189(b): Agricultural credit societies and rural development banks
The expressions primary agricultural credit society and primary co-operative agricultural and rural development bank have the respective meanings assigned under Section 150 of the Income-tax Act, 2025.
These definitions are relevant to the special monetary limits available for qualifying transactions under Sections 185 and 188. Merely using the word "co-operative" in an institution's name does not establish eligibility.
Section 189(c): Specified sum
A specified sum means any sum of money receivable, whether as an advance or otherwise, in relation to the transfer of an immovable property, whether or not the transfer actually takes place.
The definition is deliberately wider than an advance: it can include another property-transfer-related amount receivable, depending on the facts. It is relevant to the restrictions on taking or accepting money under Section 185.
Section 189(d): Specified advance
A specified advance means any sum of money in the nature of an advance, whatever name is used for it, in relation to the transfer of an immovable property, whether or not the transfer actually takes place.
This expression is particularly relevant to the repayment restrictions under Section 188, including repayment following cancellation of a proposed property transaction.
What is the difference between specified sum and specified advance?
Specified sum: covers money receivable in relation to a transfer of immovable property, whether an advance or another form of payment.
Specified advance: focuses on money that is in the nature of an advance in relation to that transfer, irrespective of the label used.
Both definitions can apply even where the proposed transfer is never completed. The definition alone does not determine whether a particular payment mode is prohibited; the operative section and its thresholds must also be applied.
Practical illustrations
Example 1: Booking money for a flat
A prospective buyer pays booking money towards a flat. That payment can be a specified sum and, if it is in the nature of an advance, also a specified advance. The manner of acceptance should be assessed under Section 185.
Example 2: Cancellation and refund
A property sale is cancelled and the seller returns an advance. The fact that the sale did not occur does not, by itself, take the advance outside Section 189(d). Check Section 188 for the prescribed repayment mode and applicable monetary threshold.
Example 3: Agricultural co-operative transaction
A qualifying primary agricultural credit society accepts or repays a loan involving a member. Its legal classification under Section 150 is relevant when evaluating the special limits in Sections 185 and 188.
Which related provisions should be read with Section 189?
- Section 185: mode of taking or accepting certain loans, deposits and specified sums.
- Section 186: mode of undertaking transactions, including restrictions on certain large cash receipts.
- Section 187: acceptance of payment through prescribed electronic modes.
- Section 188: mode of repayment of certain loans, deposits and specified advances.
Under the Income-tax Act, 1961, the corresponding payment-mode rules appeared principally in Sections 269SS, 269ST and 269T, with relevant explanations and definitions. Section 189 of the 2025 Act should not be confused with Section 189 of the 1961 Act, which dealt with assessment when a firm was dissolved or its business discontinued.
Frequently asked questions
Does Section 189 itself prohibit cash transactions?
No. It defines expressions used in Chapter XII. The operative restrictions are found in Sections 185, 186 and 188, among other provisions.
Does specified advance include a cancelled property transaction?
Yes. The statutory definition expressly covers an advance related to transfer of immovable property even if the transfer does not take place.
Are specified sum and specified advance identical?
No. A specified sum is broadly any money receivable in connection with a property transfer, while a specified advance is specifically an amount in the nature of an advance.
Does every co-operative bank qualify as a primary agricultural credit society?
No. The statutory categories are distinct. The relevant definitions and institutional status must be verified before relying on a special exception or threshold.
Statutory references and further reading
Last reviewed: 10 November 2026. This article is general legal information. Check the latest legislation, rules and notifications for a particular transaction.