Freight u/s 40a(3)

Single party in a single day..!!

Each Transporter should be considered separately, i.e. if we make payment more than 35000 in a day to no. of Transporter then it is allowable.

Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction. However if payment is being made for plying, hiring or leasing goods carriages then Limit for these section is Rs 35000/-,instead Of  20000/-

Section 40A(3)(a) uses word any expenditure, each bill is a separate expenditure, i.e. one can make payment to a person more than 35000 towards more than one bill amounting less than 35000.

To illustrate with an example, let us assume a taxpayer has made payment of Rs. 45000 to a single transporter in a single day towards more than one bill (Single bill amount should not exceed limit under Section 40A(3)(a)) then it will be an allowable expenditure.