An employer paid a monthly salary of Rs. 35,000 to an employee in cash. How will this be treated when calculating the employer's taxable business income?

Correct answer: B) B) Disallowed because any salary exceeding Rs. 32,000 per month must be paid via crossed cheque or direct bank transfer.

Explanation

Under Section 21, any salary paid or payable exceeding Rs. 32,000 per month is an inadmissible deduction if it is paid otherwise than by a crossed cheque or direct transfer of funds to the employee’s bank account.