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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) shall be attracted if the following conditions are fulfilled: Assessee incurs any expenditure in respect of which payment or aggregate of payments made to a person in a single day of a sum exceeding 20,000 otherwise than by account payee cheque or account payee demand draft. Section 40A(3A): Where any expenses paya .....

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the following cases as specified in Rule 6DD, payment in a sum exceeding 20,000 may be made otherwise 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 agricul .....

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a book adjustment from any account in a bank to any other account in that or any other bank; iv. a bill 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 .....

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er in a cottage industry, to the producer of such products. No bank service [Rule 6DD(g)] - Where the 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, .....

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