Currently, bill payments related to electricity consumption made to electricity companies are not allowed through cheque in case payment is made after a certain date or delayed/late payment after due date. Assessee in such situations is left with no option but to pay in cash. The same is disallowed under section 40A(3) in case payment exceeds Rs 20,000 as Rule 6DD currently do not provide exception in such cases..


It is suggested that the provisions of section 40A(3) be rationalized to exclude payments in cash to Electricity companies where the payment is not accepted beyond a date through cheque. Due to this genuine electricity payments made in cash due to commercial expediency are getting disallowed and hardship is caused to assessee.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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