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of <h1>Section 40A(3) Exceptions: Bank Clearance Issues May Allow Cash Payments Over Rs. 2,500 with Proper Proof.</h1> Section 40A(3) of the Income-tax Act, 1961 mandates that payments over Rs. 2,500 must be made via crossed cheques or bank drafts. However, due to bank clearance issues, this requirement can cause difficulties. Clause (j) of rule 6DD allows exceptions if 'exceptional or unavoidable circumstances' prevent such payments, provided the payer proves the payment's authenticity and the payee's identity. Bank clearing suspensions are considered exceptional circumstances, exempting affected payments from Section 40A(3) if the necessary evidence is presented to the Income-tax Officer.
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