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Home Acts & Rules Bill Bills FINANCE BILL, 2017 Chapters List Chapter III DIRECT TAXES - Income-tax This
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Clause 15 - Amendment of section 40A. - FINANCE BILL, 2017

FINANCE BILL, 2017
Chapter III
DIRECT TAXES - Income-tax
  • Contents
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Amendment of section 40A.

15. In section 40A of the Income-tax Act,-

(a) in sub-section (2), in clause (a), in the proviso, after the words “Provided that”, the words, figures and letters “for an assessment year commencing on or before the 1st day of April, 2016” shall be inserted;

(b) with effect from the 1st day of April, 2018,-

(A) in sub-section (3), for the words “exceeds twenty thousand rupees”, the words “or use of electronic clearing system through a bank account, exceeds ten thousand rupees,” shall be substituted;

(B) in sub-section (3A),-

(i) after the words “account payee bank draft,”, the words “or use of electronic clearing system through a bank account” shall be inserted;

(ii) for the words “twenty thousand rupees”, the words “ten thousand rupees” shall be substituted;

(iii) in the first proviso, for the words “exceeds twenty thousand rupees”, the words “or use of electronic clearing system through a bank account, exceeds ten thousand rupees,” shall be substituted;

(iv) in the second proviso, for the words “twenty thousand rupees”, the words “ten thousand rupees” shall be substituted;

(C) in sub-section (4),-

(i) after the words “account payee bank draft”, the words “or use of electronic clearing system through a bank account” shall be inserted;

(ii) after the words “such cheque or draft”, the words “or electronic clearing system” shall be inserted.

 



 

Notes on Clauses:

Clause 15 of the Bill seeks to amend section 40A of the lncome -tax Act relating to expenses or payments not deductible in certain circumstances.

Sub-section (3) of the said section provides that where the assessee incurs any expenditure in respect of which payment exceeding twenty thousand rupees is made otherwise than by an account payee cheque drawn on a bank or account payee bank draft to a person in a single day, no deduction shall be allowed in respect of such expenditure.

It is proposed to amend the said sub-section so as to provide that where the payments or aggregate of payments in a day to a person otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, exceeds ten thousand rupees in a day, no deduction shall be allowed under the said sub-section or, as the case may be, such payment shall be deemed to be the profits and gains of business or profession of the assessee.

Consequential amendments are also proposed to be made in sub-sections (3A) and (4) of the said section.

It is also proposed to amend the proviso to clause (a) of sub-section (2) which is consequential to the amendments proposed in section 92BA.

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-20l9 and subsequent years.

 
 
 
 
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