Cash payment limit restricts deduction and can convert later cash settlements into taxable business income unless prescribed exceptions apply.

Amendment substitutes subsections providing that cash payments to a person in a day, otherwise than by account payee cheque or bank draft, exceeding the prescribed cash threshold will render expenditure non-deductible. If an allowance was earlier made and the liability is later discharged in cash under the same conditions, that payment is to be treated as business income of the subsequent year. A proviso allows prescribed exceptions considering banking facilities, business expediency and other relevant factors.

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