Section 40A → Section 43
Expenses or payments not deductible in certain circumstances
Quick Answer
Section 40A of the Income Tax Act, 1961 (Expenses or payments not deductible in certain circumstances) corresponds to Section 43 of the Direct Tax Code 2025 (Income-tax Act, 2025), effective 1st April 2026. Status: Retained.
Sec 40A
Provision Summary
Disallows cash payments exceeding Rs. 10,000 in a day (40A(3)) and unreasonable payments to relatives/related parties (40A(2)).
Sec 43
Provision Summary
Retained. The cash transaction limit of Rs. 10,000 remains a strict barrier against black money generation in businesses.
Key Changes & Highlights
- Related party transactions scrutinized using advanced graph-database mapping of PAN relationships.
Related Articles from the Tax Academy
corporate compliance
DTC 2025: Software Updates for Form 3CB-3CD Tax Audit
Expert guide on migrating from Income Tax Act 1961 to Direct Tax Code 2025. Detailed analysis of Form 3CB-3CD software updates, ERP needs & corporate action plan.
corporate compliance
Direct Tax Code 2025: Cash Payments Over ₹10,000 Rule Continues
A professional compliance guide for businesses on the 100% disallowance for cash expenses over Rs 10,000 under the new Direct Tax Code 2025, transitioning from Section 40A(3).
corporate compliance
Related Party Transactions: Sec 40A(2) vs New Direct Tax Code 2025
A detailed compliance guide for corporations on the transition from Section 40A(2) of the Income Tax Act 1961 to the new rules for related party transactions under the proposed Direct Tax Code 2025.
corporate compliance
Disallowed Expenses: A Corporate Guide to the New Direct Tax Code 2025
A professional compliance guide for corporations on the transition from the Income Tax Act 1961 to the Direct Tax Code 2025, focusing on disallowed expenses.
Frequently Asked Questions
What does Section 40A of the Income Tax Act 1961 deal with?
Section 40A (Expenses or payments not deductible in certain circumstances) Disallows cash payments exceeding Rs. 10,000 in a day (40A(3)) and unreasonable payments to relatives/related parties (40A(2)).
What is the new section number for Section 40A under the Direct Tax Code 2025?
Section 40A of the ITA 1961 maps to Section 43 of the Direct Tax Code 2025 (Income-tax Act, 2025), effective from 1st April 2026.
What is the status of Section 40A under the new tax code?
Section 40A is marked as "Retained" with status "Active". Impact: High - Forces digital payments for business expenditures.
What are the key changes to Section 40A under DTC 2025?
Related party transactions scrutinized using advanced graph-database mapping of PAN relationships.
Disclaimer: This page is for educational and reference purposes only. Section mappings are based on publicly available drafts and circulars. Always consult a qualified Chartered Accountant before filing or making compliance decisions under the Direct Tax Code 2025.
Need professional help on Section 40A?
Compare trusted providers — both offer DTC 2025-ready CA services.
*Affiliate links — we may earn a small commission at no extra cost to you. Disclosure.
Want to calculate tax on this section?