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A brief Summary of the Sections restricting cash payment under the Income Tax Act, 1961.

In this article, I am only listing the sections and the limits for an overall brief summary. In a series of article I will be discussing each of these sections in detail.

Summary of the Sections restricting cash payment under the Income Tax Act, 1961
   

Disallowance

Limit

Mode

Exceptions

Heads of Income

1.

Sec 35AD

disallow capital expenditure in respect of which payment or aggregate payment

> 10,000 per person per day

Otherwise than by

Account payee Cheque/Draft and ECS

or such other electronic mode as may be prescribed [Finance Act 2019]

None

2.

Sec 40A(3)/(3A)

Any payment for any expenditure – revenue or Capital : allowed as a deduction u/s 30 to 37

> 10,000 per person per day per bill

>35,000 for transporter payments

Otherwise than by

Account payee Cheque/Draft and ECS

or such other electronic mode as may be prescribed [Finance Act 2019]

Rule 6DD

3.

Sec 43(1)

Actual cost of a DCA: where payment is made for the purchase of a Capital Asset

> 10,000 per person per day

Otherwise than by

Account payee Cheque/Draft and ECS

or such other electronic mode as may be prescribed [Finance Act 2019]

None

4.

43CA

50C & 56(2)(x)

Where the date of agreement fixing the value of consideration for the transfer of the asset and the date of registration of such transfer of asset are different,

then the full value of consideration for transfer of such asset shall be the stamp duty value on the date of the agreement provided the amount of consideration or a part thereof has been received by

Account payee Cheque/Draft and ECS

or such other electronic mode as may be prescribed [Finance Act 2019]

None

5.

Sec 44AD

%age of the total turnover or gross receipts received

· during the previous year or

· before due date of filing of return under section 139 (1)

6% of such receipts will be deemed income. & for other modes of receipts(including money not received) it will be 8%

Otherwise than by

Account payee Cheque/Draft and ECS

or such other electronic mode as may be prescribed [Finance Act 2019]

None

DEDUCTIONS FROM GTI

7.

Sec 80G

Donations to certain approved institutions

> 2,000

Otherwise than by cash

None

8.

Sec 80GGA

Donations to Research Institutions by a person not doing business or profession

> 10,000

Otherwise than by cash

None

9.

Sec 80 GGB/GGC

Donation to political party and Electoral trust

> 0

Otherwise than by cash

None

10.

Sec 80JJAA

Additional 30% deduction for additional employee cost

To claim the deduction the payment of salary to the employee must be paid

Otherwise than by

Account payee Cheque/Draft and ECS

or such other electronic mode as may be prescribed [Finance Act 2019]

11.

Sec 13A

Section 13A of the Act requires a political party to receive donation

> 2,000

Otherwise than by

Account payee Cheque/Draft and ECS

or such other electronic mode as may be prescribed [Finance Act 2019]

Loans & other receipts

6.

Sec 269ST

No person shall receive an amount of

· Receipts in Kind not covered

· This section applies to the receiver

· Sec 271DA an amount equal to the receipt is penalty

≥ 200,000

Per person/per day

· in respect of a single transaction; or

· in respect of transactions relating to one event or occasion from a person,

Otherwise than by

Account payee Cheque/Draft and ECS or w.e.f 01/09/19 such other electronic mode as may be prescribed [Finance Act 2019]

Received BY the following not covered

Govt./Banks/Post Office

6DD not applicable

Does not apply to loans/Deposits for the Sec 269SS & 269T are applicable

Sec 269SU

w.e.f 01/11/2019

Mode of acceptance of business payments :

The Section is applicable to businessnot profession

Sec 271DB: Penalty of 5000 per day

No transaction charges on this by the banks

· Where the turnover > 50 crore

· Applicable to every person

All payments to be collected through electronic modes prescribed

12.

269SS

Acceptance of loans or advances of specified sum

> 20,000

Otherwise than by

Account payee Cheque/Draft and ECS

or w.e.f 01/09/19 such other electronic mode as may be prescribed [Finance Act 2019]

13.

269T

Repayment of loans or advances of specified sum

> 20,000

Otherwise than by

Account payee Cheque/Draft and ECS

or w.e.f 01/09/19 such other electronic mode as may be prescribed [Finance Act 2019]

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Category Income Tax, Other Articles by - Arvind Tuli 



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