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Section 40A(3) & 40A(3A) - Payment made otherwise than by account payee cheque

Income Tax - Profit and Gains of Business or Profession - 60 - SEC - 40A(3) and 40A(3A): PAYMENT MADE OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT Section 40A(3): Where the assessee incurs any expenditure in respect of which the payment or aggregate of payments made to a person in a day, otherwise than by a cheque drawn on a bank or bank draft, [ exceeds 20,000/-] [or use of electronic clearing system through a bank account, exceeds ten thousand rupees,]( FA, 2017, w.e.f. 1 .....

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iness and accordingly chargeable to income-tax as income of the subsequent year if the payment made to a person in a day, exceeds 20,000/- (10,000/- inserted by FA, 2017 w.e.f. 1-4-2018) Provided that no disallowance shall be made under sub-section (3) where a payment or aggregate of payments made to a person in a day, otherwise than by a cheque drawn on a bank or bank draft, exceeds 20,000/- [or use of electronic clearing system through a bank account, exceeds ten thousand rupees,]( FA, 2017, w .....

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e than by an account payee cheque/DD. Payment to Specified payee [Rule 6DD(a)] - Where the payment is made to i. Reserve Bank of India or any banking company as defined in section 5(c) of Banking Regulation Act, 1949; ii. State Bank of India or any subsidiary bank as defined in section 2 of SBI (Subsidiary Banks) Act, 1959; iii. any co-operative bank or land mortgage bank; iv. any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulat .....

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ill of exchange made payable only to a bank; v. the use of electronic clearing system through a bank account; vi. a credit card; vii. a debit card. Adjustment in books [Rule 6DD(d)] - Where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee. Purchase of certain products [Rule 6DD(e)] - Where the payment is made for the purchase of: i.agricultural or forest produce; or ii.the .....

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payment is made in a village or town, which on the date of such payment is not served by any bank to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town. Terminal benefit to employee [Rule 6DD(h)] - Where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment .....

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