Expenses above 20000-

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Sumti Bhadani (Querist)
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06 September 2010 Sir, if I pay more than Rs.20000 to a person for more than one bill, than will my expense be disallowed under I.T Act 1961 or not?

SANJAY TALATI

SANJAY TALATI (Expert)
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06 September 2010 Sec. 40A(3) restricts the payt. of exp. exceeding Rs. 20,000/- by disallowing 100% , if payt is made by any mode other than a/c payee Cheq or draft.

W.e.f. 01/10/2009, the payt made for plying, hiring or leasing goods carriage , the limit is enhanced to Rs. 35000/-. There are certain exceptions provided under Rule 6DD under which exp. een exceeding Rs. 20,000- 35000/- shall be allowed , even though payment or aggregate of payments made to a person in a day not made by an account payee chq /draft.

Hence, now even if the payt exceeding Rs. 20,000/- is made to the same person even against two or more than two bills, restrictions of Sec. 40A(3) would get attracted.