Excessive payment disallowance restricts deductions for non arm's length and prohibited cash payments, requiring prescribed payment modes. Section 40A disallows as deductible any expenditure to specified persons that the assessing officer considers excessive or unreasonable having regard to fair market value, legitimate business needs or benefit to the assessee; it defines specified persons and substantial interest. Payments made otherwise than by account payee cheque, prescribed bank draft or prescribed electronic mode exceeding the statutory daily limit are not deductible, and such payments discharged after an allowance may be treated as business income. Exceptions and a higher limit for goods carriage payments are provided, and certain gratuity and fund contributions are non deductible.