Can cash payment made for Vehicle and Equipment insurance.

[Sanjoy Das]

Dear Sir,

Let us know whether vehicle insurance and equipment insurance made by cash. If it is disallowed , kindly let us know the IT U/s ?

Regards

Sanjoy Das

AI Summary

Cash Payments for Insurance Premiums Restricted to Rs. 20,000 Under Income Tax Section 40A(3) A query was raised regarding the permissibility of making cash payments for vehicle and equipment insurance under income tax regulations. The reply clarified that while insurance premiums are addressed under Section 36(1)(i) of the Income Tax Act, 1961, which does not specify the mode of payment, Section 40A(3) restricts cash payments to a maximum of Rs. 20,000. Payments exceeding this amount must be made via account payee cheque or bank draft to avoid disallowance under the provisions of Section 40A(3).