Section 106
Section 106: amount borrowed or repaid through negotiable instrument, hundi, etc
Section 106 targets loans borrowed or repaid outside the account-payee-cheque banking channel - for example, through a hundi or other negotiable instrument, or any other mode the Board specifies. Such amounts (including interest) are deemed to be income of the person borrowing or repaying, in the year the borrowing or repayment happened.
What Section 106 says
Where any amount, including interest on it, is borrowed or repaid through a negotiable instrument or hundi - other than by an account payee cheque - or through any other mode the Board specifies, the amount so borrowed or repaid (including any interest paid on the borrowed amount) is deemed to be the income of the person borrowing or repaying it, for the tax year in which the amount was borrowed or repaid.
No double taxation on repayment
Where the borrowed amount has already been deemed to be a person's income under sub-section (1), that person is not assessed again on the same amount under this sub-section when it is later repaid.
Frequently asked questions
What kind of borrowing does Section 106 target?
Amounts borrowed or repaid through a negotiable instrument or hundi (rather than an account payee cheque), or through any other mode specified by the Board.
Is the same amount taxed twice, once on borrowing and once on repayment?
No - once an amount has been deemed income on borrowing, it is not assessed again under Section 106 when it is repaid.
Related sections
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Get help responding to a cash loan/hundi queryLast updated 9 September 2026