To further understand the notion, one must first distinguish among the three terms mentioned below. All orders are now shipping as usual and will be dispatched within 1-2 business days. Clause 16 of the Bill seeks to amend section 44AD of the Income-tax Act relating to special provision for computing profits and gains of business on presumptive basis. Clause 12 of the Bill seeks to amend section 43 of the Income-tax Act relating to definitions of certain terms relevant to income from profits and gains of business or profession.
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Sub-sections (3), (3A) and (4) of the said section provide for disallowance of any expenditure for which the assessee makes payment (or an aggregate of payments) exceeding ten thousand rupees through any mode other than through an account payee cheque or an account payee bank draft or using the electronic clearing system through a bank account. In order to encourage other electronic modes of payment, it is proposed to amend the above section so as to include such other electronic mode as may be prescribed, in addition to the already existing permissible modes of payment in the form of an account payee cheque or an account payee bank draft or the electronic clearing system through a bank account. Section 44AD of the Act relates to presumptive taxation scheme for eligible businesses and provides that in case of an assessee engaged in an eligible business shall be eligible to avail the benefit of the presumptive taxation scheme if the profit from such business is declared at at the rate of eight per cent.
In section 80JJAA of the Income-tax Act, in the Explanation, in clause (i), in the first proviso, in clause (b), for the words “bank account”, the words “bank account or through such other electronic mode as may be prescribed” shall be substituted with effect from the 1st day of April, 2020. In section 43 of the Income-tax Act, in clause (1), in the second proviso, for the words “bank account”, the words “bank account or through such other electronic mode as may be prescribed” shall be substituted with effect from the 1st day of April, 2020. In section 13A of the Income-tax Act, in the first proviso, in clause (d), for the words “bank account”, the words “bank account or through such other electronic mode as may be prescribed” shall be substituted with effect from the 1st day of April, 2020.
How Is an Account Payee Cheque Different from Other Cheques?
Clause 21 of the Bill seeks to amend section 56 of the Income-tax Act relating to income from other sources. “(XI) from such class of persons and subject to such conditions, as may be prescribed.”. Clause 18 of the Bill seeks to amend section 50C of the Income-tax Act relating to special provision for full value of consideration in certain cases. The said section provides that any income of a political party which is chargeable under the head “Income from house property” or “Income from other sources” or “Capital Gains” or income from voluntary contributions shall not be included in the total income of the previous year of such political party.
COLOP – STAMP – A/C PAYEE NON NEGOTIABLE (C
Clause 11 of the Bill seeks to amend section 40A of the Income-tax Act relating to expenses or payments not deductible in certain circumstances. Clause 9 of the Bill seeks to amend section 35AD of the Income-tax Act relating to deduction in respect of expenditure on specified business. The transmission of a cheque between one individual to the following individual and this process you can refer to as an endorsement. Whenever the recipient of a cross cheque has to make a payment, he\she can shift the cheque to his\her creditor. He\she must enter the endorsing guidelines on the reverse of the cross cheque to accomplish this. The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice.
The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and a/c payee the same may change materially.
What do you mean by a payee account?
- One can mention “account payee”, and the words one must write on it are Account Payee or A/C payee.
- Of additional employee cost in the case of an existing business shall be allowed if the emolument of such additional employees are paid through any other electronic mode as may be prescribed.
- To encash it, you are required to deposit the cheque into your Savings Account by filling out the cheque deposit form.
- Similar provision is made in the second proviso to sub-section (1) of section 50C and the second proviso to sub-clause (b) of clause (x) of sub-section (2) of section 56.
- If you are new to the world of banking, it is rather usual to come across the term ‘account payee or a/c payee cheque’ and not quite understand what do they actually mean.
- You must deposit it into your savings account using the cheque deposit form.
There will always be a party that provides the goods or services and a party that receives the goods or services in any type of transaction. To receive goods or services, a payer must exchange value, which is usually money, with the payee. It is proposed to amend the said clause (b) so as to empower the Board to make rules to provide that deduction of an amount equal to thirty per cent.
- In section 35AD of the Income-tax Act, in sub-section (8), in clause (f), for the words “bank account”, the words “bank account or through such other electronic mode as may be prescribed” shall be substituted with effect from the 1st day of April, 2020.
- The APC is a super security form of cheque since one can put money only into the payee’s accounts, and the recipient does not have permission to mark this cheque for anybody else.
- The individual holding the cheque can redeem it across the countertop.
- Clause (viii) of sub-section (2) of the said section provides that income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A shall be chargeable to tax.
- Please keep in mind that you must write the savings account and contact detail on the reverse side of the cheque.
- Or higher of the turnover, received through any other electronic mode as may be prescribed.
- A crossed cheque differs from an account payee cheque in several ways.
Therefore, for simplification of provisions it would be better to insert a definition of approved modes of payments and receipts. The definition can include presently recognised methods and also other new methods as may be prescribed/ notified. Modes for payment and receipts were also fewer- crossed cheque, a/c payee cheque or bank draft etc.
In the budget proposals we find several proposal for prescribed new type of electronic modes for payment and receipts. In all such proposals it is mentioned that “Or through such other electronic mode as may be prescribed” We find some of such proposals vide clauses 8,9,11,12,14,16, 18, 21 & 27. There may be some more such proposals and this list may not be exhaustive. The account payee cheque secures your transfer as the payment can only be deposited in the payee’s account.
The bank is usually the drawee, and the drawer instructs the bank to draw the amount. A payee is the person or entity to whom the final payment is made, and his/her/its name appears on the cheque. As a result, in the case of an account payee cheque, payment shall be done only by depositing it into the payee’s account.
At present we have many apps by which payments can be made and received through electronic modes involving bank or other approved organisation for such activities. If you ever receive an account payee cheque, it is not possible for you to cash it instantly. To encash it, you are required to deposit the cheque into your Savings Account by filling out the cheque deposit form. After filling out the form, clip the cheque to the form and drop it inside the cheque deposit box or hand it over to the bank official.
In section 43CA of the Income-tax Act, in sub-section (4), for the words “bank account”, the words “bank account or through such other electronic mode as may be prescribed” shall be substituted with effect from the 1st day of April, 2020. Cheques are a popular way of paying in India since they are secure and simple. Individuals are generally perplexed by numerous cheques, like crossing cheques, holder paycheques and ac payee cheques. For a more profound grasp, let us discuss below thorough details regarding account payee cheques, their purposes and how they vary from all other kinds of cheques. An account payee cheque is a type of cheque that can be deposited into the payee’s bank account (the party to whom the final payment is to be made and whose name is mentioned on the cheque). It is proposed to amend the said second proviso so as to empower the Board to make rules to provide that payment made through such electronic mode as may be prescribed shall not be ignored for the purposes of determination of actual cost.