Cash payments exceeding 20,000 Sec 40A 3


No deduction shall be allowed in respect of such expenditure .for which

Individual payment, or aggregate of payments made by assessee to a person in a day, exceeds Rs. 20,000.

and such payments are made otherwise than by an account payee cheque or account payee bank draft,

Exception : - No disallowance shall be made in following cases where payments are made to :-

RBI, SBI or any banking company, or any primary credit society, or any coop banks, or LIC.
Government under any legal requirement, say Sales Tax, Custom duty and others ;
Payment in town or village not served by any bank
Payment by book adjustment against liability
By credit card, debit card Internet banking or any other similar mode.
Towards purchase of agricultural or forest product or produce of any animal husbandry or fish or similar product to cultivator, grower or producer of such article.
Payment made on a bank Holiday
Payment to employee/ heir of employee in connection with retirement, resignation, retrenchment,
discharge or death for gratuity, retrenchment compensation or similar terminal benefit not exceeding
50,000