Section 40A(3) of Income Tax Act 1961 provides for disallowance of expenses 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 bank or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, exceeds Rs 10,000 (35,000 for transportation charges).
So, if you paid Salary in excess of Rs. 10,000 in cash than that's disallowed u/s 40A(3).
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