Income-tax (Seventh Amendment) Rules, 2008 - Substitution of rule 6DD
Notification No. 97 was published on 10 October 2008. Its subject is Income-tax (Seventh Amendment) Rules, 2008 - Substitution of rule 6DD.
This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.
Under section 295 read with the proviso to sub-section (3A) of section 40A of the Income-tax Act, 1961, the Central Board of Direct Taxes makes the Income-tax (7th Amendment) Rules, 2008, substituting rule 6DD of the Income-tax Rules, 1962. The substituted rule 6DD sets out the cases and circumstances in which no disallowance under sub-section (3) of section 40A is to be made and no payment is to be deemed profits and gains of business or profession under sub-section (3A), although a payment or the aggregate of payments made to a person in a day otherwise than by an account payee cheque or account payee bank draft exceeds twenty thousand rupees. The exceptions cover payments to the Reserve Bank of India, banking companies, the State Bank of India and its subsidiary banks, co-operative and land mortgage banks, primary agricultural credit or primary credit societies and the Life Insurance Corporation of India; payments to Government required by its rules to be made in legal tender; payments made by letter of credit, mail or telegraphic transfer, book adjustment between bank accounts, a bill of exchange payable only to a bank, the electronic clearing system, a credit card or a debit card; adjustment against a liability of the payee for goods or services supplied by the assessee; purchases of agricultural or forest produce, animal husbandry, dairy or poultry produce, fish or fish products and horticultural or apicultural products from the cultivator, grower or producer; products of a cottage industry made without the aid of power, paid to the producer; payments in a village or town not served by any bank to a person residing or carrying on business there; terminal benefits to an employee or his heir not exceeding fifty thousand rupees in the aggregate; salary paid after deduction of tax under section 192 to an employee temporarily posted for fifteen days or more away from his normal place of duty or on a ship who has no bank account there; payments required to be made on a day when banks were closed by holiday or strike; payments by a person to his agent who must pay cash for goods or services on his behalf; and payments by an authorised dealer or money changer against the purchase of foreign currency.
INCOME-TAX (SEVENTH AMENDMENT) RULES, 2008 - SUBSTITUTION OF RULE 6DD
NOTIFICATION NO. 97/2008, DATED 10-10-2008
In exercise of the powers conferred by section 295 read with proviso to sub-section (3A) of section 40A of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—
1. (1) These rules may be called the Income-tax (7th Amendment) Rules, 2008.
(2) They shall come into force with effect from assessment year 2009-10.
2. In the Income-tax Rules, 1962, for rule 6DD, the following rule shall be substituted, namely:-
["Cases and circumstances in which a payment or aggregate of payments exceeding twenty thousand rupees may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft.
6DD. No disallowance under sub-section (3) of section 40A shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3A) of section 40A where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees in the cases and circumstances specified hereunder, namely :—
(a) where the payment is made to—
(i) the Reserve Bank of India or any banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);
(ii) the State Bank of India or any subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959);
(iii) any co-operative bank or land mortgage bank;
(iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949 (10 of 1949);
(v) the Life Insurance Corporation of India established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956):
(b) where the payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender;
(c) where the payment is made by—
(i) any letter of credit arrangements through a bank,
(ii) a mail or telegraphic transfer through a bank;
(iii) a book adjustment from any account in a bank to any other account in that or any other bank;
(iv) a bill of exchange made payable only to a bank;
(v) the use of electronic clearing system through a bank account;
(vi) a credit card;
(vii) a debit card.
Explanation.—For the purposes of this clause and clause (g), the term "bank" means any bank, banking company or society referred to in sub-clauses (i) to ( iv) of clause (a) and includes any bank [not being a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949)], whether incorporated or not, which is established outside India;
(d) where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee;
(e) where the payment is made for the purchase of—
(i) agricultural or forest produce; or—
(ii) the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or
(iii) fish or fish products; or
(iv) the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products;
(f) where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products;
(g) where the payment is made in a village or town, which on the date of such payment is not served by any bank, to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town;
(h) where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity,' retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed fifty thousand rupees;
(i) where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Act, and when such employee—
(i) is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship and
(ii) does not maintain any account in any bank at such place or ship;
(j) where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike;
(k) where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person;
(1) where the payment is made by an authorised dealer or a money changer against purchase of foreign currency or travellers cheques in the normal course of his business.
Explanation.—For the purposes of this clause, the expressions "authorised dealer" or "money changer" means a person authorised as an authorised dealer or a money changer to deal in foreign currency or foreign exchange under any law for the time being in force.]
| Rule of the 1962 Rules | Now, in the 2026 Rules |
|---|---|
| Rule 6DD | rule 26 |
assessment year 2009-10.
In the disallowance proposed under sub-section (3) of section 40A in an assessment, and in the tax audit report where cash payments above the limit are reported.
Rules it names. Rule 6DD of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
Source: the Income Tax Department’s own published text — its page for this instrument.