Restriction of issue of Bearer Cheque

[Pandurang Nirmal]

Pl.tell us whether an incorporated company can freequently issue bearer cheques to its clients and employees and workers?What are restrictions on issuing bearer cheques as per company law and other laws inforce in our country?

As per the Sec. 40A of Income Tax Act, 1961

"Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure" [ In certain cases it is Rs. 25000/- to a person in a day]

[tarsem gupta]

Reply of Raja Rajan is correct.

[vinod bhat]

please tell issue bearer cheques issued by compnies

AI Summary

Deduction denial for non-account-payee payments limits company use of bearer cheques for deductible expenses.
Section 40A of the Income Tax Act disallows deduction for expenditure paid otherwise than by an account-payee cheque or account-payee bank draft where payments to a person in a day exceed the statutory threshold; contributors concur that this creates a compliance constraint on companies issuing bearer cheques for deductible payments.