Formalization of rural & semi urban economy While cash transactions have now been done away with in most cases, it is still allowed for payment to farmers for their agro-produce. When payment to farmers for almost all the Govt schemes, subsidies etc is done to bank account directly (DBT), why this practice of payment for farm produce by cash? Well, I may not have proper understanding of perishable agro-produce market, where there may be some compulsion/conditions which might necessitate the payment by cash. But, at least in case of non-perishable agro-produce, there is not a single valid reason for necessary cash payment. Well here is a brief about what am I suggesting: Existing provision in the Income Tax Act u/s 40A (3): any expenditure in cash above Rs.10,000/- is not allowed as expenditure. So to that extent, taxable income of the business increases. Impact of this provision is that, no business normally makes any payment above Rs.10,000/- in cash. But there are ...
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