New
Delhi: The finance ministry is planning to make amendments
to Section 40A of the Income Tax Act to check unaccounted
transactions by business assesees through crossed cheques
and demand drafts.
Section
40A stipulates that a business assesee would not be allowed
tax deduction for payments exceeding Rs20,000 unless the
payment is made through a crossed cheque or a crossed
bank draft.
Tax
experts said Section 40A had been introduced after some
firms in the unorganised sector were found to be claiming
tax benefits on payments of Rs50,000 and above in cash
by showing such payments as a business expense.
Officials
said it had been brought to the notice of the income tax
department
that even crossed cheques and bank drafts were being used
to settle temporary outstanding dues as most cheques and
drafts had a 90-day validity.
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