Payment Exceeding Fifty Thousand Rupees to be Made by Crossed Cheques

Any amount paid under a single account head which in aggregate exceed fifty thousand rupees made other than by a crossed cheque, crossed bank draft, crossed pay order or any other crossed banking instrument will not be allowed as a deduction. For this purpose an online transfer of funds and payment through credit card will be treated a proper banking channel.

However, the amount paid for an expenditure which does not exceed rupees ten thousand will be allowed even if not paid through the above instruments. Similarly expenditures on account of utility bills, freight charges, travel fare, postage, payment of taxes, duties, fines or any other statutory obligation are exceptions

Payment of Salary Exceeding Rs. 15,000 per Month

Any salary paid or payable exceeding fifteen thousand rupees per month other than a crossed cheque or direct transfer of funds to the employee’s bank account is not allowed as deduction.

Capital Nature Expenditure.

Any expenditure paid or payable of a capital nature is not allowed as deduction. However, such expenditure shall be entitled to depreciation allowance

How to Calculate Taxable Income of a Businessman, AOP and Company

Taxable profits of business or profession are to be computed in accordance with the method of accounting regularly followed by a person. Those who follow cash system of accounting, prepare ‘Receipt and Payment Account’, whereas the person Dfa Ho following mercantile system of accounting prepare the “Profit and Loss Account”. In order to compute taxable profits, the receipt and payment account, or as the case may be, the profit and loss account has to be adjusted in the light of the income tax.