01 September 2010
The question pertains to the application of Sec. 40A(3) read with Rule 6DD of the Income Tax Rules, 1962 which provides for the disallowance of the exp. if the payment made by any mode otherwise than account payee chq. or draft. The ceiling limit is Rs. 20,000/-. Rule 6DD(b) prescribes the exception to the above and according to which if the payment made to Government (both Central & State Govt), and under the rules framed by it, such payment is required to be made in the legal tender, such as payment of direct taxes, customs, duty, excise , sales tax etc. Hence, the payment of stamp duty being the state subject, the same will be allowed irrespective of the fact whether the same exceeds Rs. 20,000/-.
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