Payment made otherwise than by account payee cheque - (New) Section 36(4) to (7) (Old) Section 40A(3) & 40A(3A)

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....cheque, UPI, etc.), • Then that expense is NOT allowed as a deduction while computing business income. Key Rules • Threshold: > Rs.10,000 per person, per day. • Specified Modes: Includes account payee cheques, drafts, and electronic clearing systems (NEFT, RTGS, UPI, etc.). • Penalty: The tax department will treat the expense as if it never happened, increasing your total taxable profit. Note: For payments made to transport operators (hiring, leasing, or plying goods carriages), this limit is increased to Rs.35,000. Reversal of earlier deduction [ Section 35(5) ] • If you claimed a tax deduction for an expense in a previous year (as an outstanding liability) but ....

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....t: Arrangements facilitated through a bank. • Electronic Transfers: Mail or telegraphic transfers processed by a bank. • Book Adjustments: Transferring funds from one bank account to another, whether within the same bank or across different banks. • Bills of Exchange: Specifically those made payable only to a bank. (d) Adjustment against mutual liability • The cash payment limit does not apply when a payment is settled via adjustment against a liability. • This occurs when the person receiving the payment (the payee) already owes the payer (the assessee) for goods supplied or services rendered, and the two balances are offset against each other (e) Purchase of agricultur....

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.... upon termination of employment or retirement. (i) Salary in special situations An assessee (employer) may pay an employee's salary in cash even if it exceeds the standard limits, provided that Income Tax has been deducted (as per provisions of section 392) and the following two conditions are met: • Temporary Posting: The employee is stationed at a location other than their normal workplace (including on a ship) for a continuous period of at least 15 days. • No Bank Access: The employee does not maintain a bank account at that temporary location or on the ship. (j) Payment to agent • The cash payment limit does not apply to payments made by a principal to their agent, provided the agent ....

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....a day, otherwise than by a cheque drawn on a bank or bank draft or use of electronic clearing system through a bank account, exceeds 10,000/ in such cases having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors. • In the case of payment made for plying, hiring or leasing goods carriages, the provisions of sub-sections (3) and (3A), 10,000/- is substituted with 35,000/- [Rule 6ABBA]. Exception In the following cases as specified in Rule 6DD, payment in a sum exceeding 10,000 may be made otherwise than by an account payee cheque/DD. • Payment to Specified payee [Rule 6DD(a)] - Where the payment is made....

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.... • RTGS (Real Time Gross Settlement); • NEFT (National Electronic Funds Transfer). and • BHIM (Bharat Interface for Money) Aadhar Pay Adjustment in books [Rule 6DD(d)] - Where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee. Purchase of certain products [Rule 6DD(e)] - Where the payment is made for the purchase of: i. agricultural or forest produce; or ii. the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or iii. fish....

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....p;in a place other than his normal place of duty or on a ship; and  ii. does not maintain any account in any bank at such place or ship. Bank closed [Rule 6DD(j)] - Where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike. Payment to agent [Rule 6DD(k)] - Where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person. Foreign currency [Rule 6DD(l)] - Where the payment is made by an authorized dealer or a money changer against purchase of foreign currency or travelers cheques in the normal cour....