Amendment of section 40A.
11. In section 40A of the Income-tax Act, with effect from the 1st day of April, 2020,––
(i) for the words “bank account” wherever they occur, the words “bank account or through such other electronic mode as may be prescribed” shall be substituted;
(ii) in sub-section (4), after the words “such cheque or draft or electronic clearing system”, the words “or such other electronic mode as may be prescribed” shall be inserted.
Notes on Clauses:
Clause 11 of the Bill seeks to amend section 40A of the Incometax Act relating to expenses or payments not deductible in certain circumstances.
Sub-sections (3), (3A) and (4) of the said section provide for disallowance of any expenditure for which the assessee makes payment (or an aggregate of payments) exceeding ten thousand rupees through any mode other than through an account payee cheque or an account payee bank draft or using the electronic clearing system through a bank account.
It is proposed to amend the said sub-sections so as to empower the Board to make rules to provide that payment made through such other electronic mode as may be prescribed shall also be allowed as deduction.
These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020- 2021 and subsequent assessment years.
