Taxation Exam > Taxation Videos > Income Tax for assessment (Inter Level) > S 40A(3). Payment Made to Relatives
S 40A(3). Payment Made to Relatives Video Lecture | Income Tax for assessment (Inter Level) - Taxation
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FAQs on S 40A(3). Payment Made to Relatives Video Lecture - Income Tax for assessment (Inter Level) - Taxation
| 1. What is Section 40A(3) of the Income Tax Act? |  |
Ans. Section 40A(3) of the Income Tax Act refers to a provision that restricts cash payments made to relatives for certain expenses. According to this section, any payment made in cash exceeding Rs. 10,000 to a relative for the purpose of any expenditure is not allowed as an expense for tax purposes.
| 2. Who is considered a relative under Section 40A(3)? | |
Ans. Under Section 40A(3), a relative is defined as a person who is related to the individual or the individual's spouse in any of the specified relationships, including spouse, brother, sister, lineal ascendant, lineal descendant, or any lineal ascendant or descendant of the spouse.
| 3. What expenses are covered under Section 40A(3) payment restrictions? | |
Ans. Section 40A(3) restricts cash payments made to relatives for various expenses, including payments for goods, services, loans, advances, deposits, or any other purpose. The provision aims to prevent tax evasion by discouraging the use of cash transactions for such payments.
| 4. Is there any exception to the cash payment limit mentioned in Section 40A(3)? | |
Ans. Yes, there are certain exceptions to the cash payment limit mentioned in Section 40A(3). These exceptions include payments made in cash for medical treatment, expenses related to a marriage ceremony, or any other specified purposes where it is customary to make cash payments.
| 5. What are the consequences of violating the provisions of Section 40A(3)? | |
Ans. If an individual violates the provisions of Section 40A(3) by making cash payments exceeding Rs. 10,000 to a relative for covered expenses, the payment will not be allowed as an expense for tax purposes. Additionally, the individual may attract penalties or face scrutiny from tax authorities for potential tax evasion. It is important to ensure compliance with the provisions to avoid such consequences.
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Dec 20, 2024 Last updated |
Video Description: S 40A(3). Payment Made to Relatives for Taxation 2024 is part of Income Tax for assessment (Inter Level) preparation.
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