Clarification on "Produce of Animal Husbandry" in Rule 6DD(f)(ii): Payments to Producers Exempt from Section 40A(3) Disallowance.

The circular clarifies the interpretation of "the produce of animal husbandry" in Rule 6DD(f)(ii) of the Income-tax Rules, 1962. It addresses the issue of disallowance under Section 40A(3) for payments exceeding twenty thousand rupees not made by crossed cheque or bank draft. The Board concludes that "the produce of animal husbandry" includes livestock, meat, hides, and skins. Payments to producers for these items are exempt from disallowance under this rule. However, this exemption does not apply to payments made to traders or middlemen who are not the producers of these goods.

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