Section 14 - Amendment of section 40A

Payment method rule: deduction denied and amounts deemed business income when payments exceed threshold without account payee cheque.

Section 40A(3) conditions deductibility and income characterisation on payment mode: payments made otherwise than by account payee cheque or account payee bank draft that exceed the statutory threshold are not deductible; payments subsequently made in a later year for liabilities previously allowed as deductions, if not by account payee cheque or draft and exceeding the threshold, are deemed business or professional income of the subsequent year. A proviso allows prescribed exceptions based on available banking facilities, business expediency and other relevant factors.