In case expenditures is incurred in respect of which payment in excess of rs.20000 is made otherwise than account payee cheque or draft. then expenditures will be disallowed.
what this mean ?
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section no 40A(3)
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under the income tax if any business related payment is being made in cash exceeding 20000 then whole of the expense incurred will be added back to the taxable income. this limit is now being reduced to 10000 from current year. for e.g. if you pay say salary to your employee of 30000 on a particular day then whole of 30000 wud be added to your taxable income ad it is in excess of 20000. hence you need to make payment either online or through account payee cheque
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