BooksIQCash payments to a single party exceeding ₹10,000 in a day are wholly disallowed as a deduction — the limit rises to ₹35,000 per day for payments to transporters.
Key points
- This provision targets payments for any expenditure incurred in PGBP that are made otherwise than by account-payee cheque, demand draft, bank transfer, or prescribed digital mode.
- The threshold is ₹10,000 per payee per day, with a higher ₹35,000 per payee per day limit specifically for payments to transporters for plying, hiring, or leasing of goods carriages.
- The consequence is severe — the ENTIRE payment is disallowed, not just the excess over ₹10,000.
- Rule 6DD lists narrow exceptions: payments to the RBI, co-operative banks, agricultural producers, residents of villages without a bank, employees on transfer carrying cash advances, and similar fact patterns.
- Payments made on days when banks were closed (strike or bank holiday) are also outside the disallowance.
Reference: §40A(3) + §40A(3A) read with Rule 6DD, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §36(4)
This page is general information for Indian businesses, current as of the
financial year shown above — not legal or tax advice. Tax law changes,
and how a provision applies depends on your specific facts. Confirm the
current position with a qualified professional before you act.
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