Amount of Rs.10000/- kept unchanged in Income-tax Act 2025 in many situations including amount not allowable, ITAT fees, TDS Threshold limit and TDS not deductible, advance tax etc.

About amount not disallowable:

In the Income Tax Act 1961 we recall limit of Rs.1000 that was revised from time to time and increased to Rs.20000. However, that was reduced to Rs.10000 long ago. We find that the same limit is kept in Income Tax Act 2025 in relation to expenses not allowable if not paid by banking channels.

Depending on user, we find youngsters paying even Rs.5 by banking channel. However, fortunately we also have large part of population consisting of old people in our population who are not conversant with or find difficult to pay by banking channel. Many such old people are living alone because children have settled at other places in India or abroad.

If inflation is considered keeping the limit at Rs.10000 is not justified in relation to payments, to be claimed as allowable, And also payment of rent from which tax is deductible.

Due to extensive use of PAN and AADHAR data base available to IT department is now huge and lot of information are collected and can be collected.

Basic exemptions have been increased and in case where baisc exemption is not applicable rates of tax have reduced.

Wages have increased and even wages of a daily rated worker is likely to be more than Rs.10000 if paid even fortnightly, in case of monthly payment it will be more than Rs.10000 in most of cases.

Though for better internal and fiscal control and to ensure that entire money reaches to workers, it is always advisable to adopt payments through banking channel. Large organized assessee prefer to pay through banking channels.

However, in many cases cash payment is required.

Limit of Rs.10000 is low in such circumstances and it need a relook to increase it.

If self-assessment treated as final assessment is to be successful in true terms, an increase is desirable to maintain honesty of tax payer.

Persons who have no taxable income and are not required to file ITR or any report, can still pay more in cash and are not / will not be in tax net.

Limits should be sensible and reasonable. Rs.10000 limit does not satisfy this test and is likely to force people to adopt some means either not to report or by splitting payments. If a provision like this is not sensible due to lower limit will force people to break it and find out some means. This causes a dilution of honesty, integrity because a common man will find it difficult to follow the limit due to reasons belonging to payee that he will have to find some means to avoid limit fixed.

Keeping all these realities, and to maintain high moral of public to follow rules, it is desirable to increase sum of Rs.10000 for allowability of cash payments.

In income tax Act, 2025 we find expression Rs.10000 ( rupees is in symbol form) as follows:

In context of cash payments

In section 36 relating to Expenses or payments not deductible in certain circumstances.

(4) Where in respect of any expenditure incurred by the assessee, any payment or aggregate of payments made in a day to a person exceeds Rs. 10000 and is not made through specified banking or online mode, then the expenditure by way of such payments shall not be allowed as a deduction.

(5) Where any deduction was made in any preceding tax year for a liability incurred for any expenditure and payment in respect of such liability is made during a sub sequent tax year and if such payment or aggregate of payments made in a day to a person exceeds Rs. 10000 and is not made through specified banking or online mode, such payment shall be deemed to be the income under the head 'Profits and gains of business or profession' in such subsequent tax year.

(6) For the purposes of sub-sections (4) and (5), the figures ' Rs. 10000' shall be read as Rs. 35000' in case the payment is made for plying, hiring or leasing of goods carriages.

In section 46 relating to Capital expenditure of specified business

(g) any expenditure of capital nature shall not include any expenditure-

(i) for which the payment or aggregate of payments made to a person in a day, is not through specified banking or online mode, exceeds Rs. 10000; or....

In Section 153 about Deduction for interest on deposits.

(2) The deduction under sub-section (1) shall be allowed for a tax year as follows:-

(a) in case of an assessee mentioned in sub-section (1)(a) or (c), the whole of the interest up to a maximum amount of Rs. 10000 on deposits in a savings account, excluding time deposits;

Remarks - deduction from income has re-entered as earlier after a gap of 2-3 years. However, limit need a revision.

In section 252 relating to Power to call for information

(e) assessee to furnish a statement of the names and addresses of all persons to whom he has paid in any tax year, rent, interest, commission, royalty, brokerage, or any annuity (not being any annuity taxable under the head 'Salaries'), amounting to more than Rs. 10000, or such higher amount as may be prescribed, together with particulars of all such payments made;

Remarks. The limit need revision to at least Rs.50000 to reduce and avoid un-necessary and meaning less powers and exercise by department. This can also cause harassment of small organisation who are not taxpayers.

In section 362 relating to Appeals to Appellate Tribunal.

About fees payable in sub-section (6) vide following clause

(c) an amount equal to 1% of the assessed income, subject to a maximum of Rs. 10000, where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than Rs. 200000;

Remarks: the amount of appeal fees is linked to amount of assessed income. It can be linked to amount of disputed income for rationality in case of high assessed income but petty sums in dispute.

In section 393 relating to Tax to be deducted at source.

We find Rs.10000 appearing in provisions about threshold limit and also in

provisions relating to no tax deduction vide TABLE FOR NO DEDUCTION AT SOURCE at several places. Many of figures are not traced in search so exact number of times Rs.10000 find place in these provisions is not ascertained.

Threshold - from winning and prize money 2 times

FOR PAYMENTS TO ANY PERSON

In no TDS table at several places - all not found in search for some technical reason. In search found only one item as follows:

Old limits as threshold limit or for no TDS need upward revision to avoid un-necessary TDS from small earners.

In section 404 relating to conditions of liability to pay advance tax.

404. Advance tax shall be payable by the assessee during a financial year, where the amount of such tax payable during that year, as computed under this Part, is Rs. 10000 or more.

Remarks: In view of enlarged TDS and TCS advance tax limit also deserve to be raised to at least Rs.50000, This will rationalise advance tax, refunds, interest payable by assessee and interest payable on refunds. Because in view of low limit of Rs.10000 many assessee take safe route and pay advance tax in March, because it is difficult to estimate income reasonably. Ultimately, when accounts are finalised income earned can be far less than estimates resulting into claim for refund and a suspicion in mind of tax authorities.