Payments by way of Cheques for claiming Deductions

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K V Subba Rao (Querist)
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20 November 2007 With regard to claiming Deduction in respect of medical insurance premia under Section 80-D of the I.T Act, the Section provides, inter alia, that premium should be paid by any mode other than cash. Such condition of making payments by any mode other than cash is not prescribed for other purposes such as Deduction under Sec 80-C for LIC Premia etc. I would like to know what could be the intention in prescribing other than cash mode of payment. Is it to curb black money, if so, why similar condition is not prescribed in all Sections allowing Deductions.

CA. Vineet Grover

CA. Vineet Grover (Expert)
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21 November 2007 Hi Subba Rao,

There has been a change in the language of mode of payment effective from A Y 2008-09 that "the premium can be paid any mode other than cash". Previously, it was to be paid by cheque.

The intention of the Department is to make it more simplified. The basic reason may be to accomodate drafts/payoders/ECS.

The language was very rigid. relaxation has been given by the Department in this regard.

Rgds/
Vineet

K V Subba Rao

K V Subba Rao (Querist)
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21 November 2007 Mr Vineeth

Please read my Query once again. I havn't used the word "Cheque" at all in the full text of my Query as I am aware of the amendement effective from AY 2008-09.

The provision has been amended for payment from "by way of Cheque" to "any mode other than cash" not with the intention of simplifying the procedure but for recognising payments that are being made through net-banking, Drafts or Pay Orders etc, that is, thorough banking channel and NOT in the form of cash.

Actually, my Query is to know the possible intention of the Finance Ministry in prescribing payment through banking channel while such condition is not stipulated for Deductions under other sections such as Sec 80-C