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Cash payment and bank transaction

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Querist : Anonymous

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Querist : Anonymous (Querist)
17 November 2014 Respected experts

I am a tax payer . I run a coaching . But i dont deposit my money in my bank account .

Now my question is ...

1) Is it really necessary to deposit or keep money in bank , if i am a tax payer ?

2) I purchased 20 chairs in cash . I payed 40000 cash . since i dont use my bank account to make an transaction , will it make any issue ?

Somebody told me , i want to pay someone above 20000 , i should use bank account . is it really necessary ?


17 November 2014 1. no. it is not necessary to deposit the money in the bank account

2. while purchasing chairs in cash is ok. but if you do any non-capital expenditure in cash in excess of Rs 20000 at a time, it will be disallowed.

17 November 2014 1. no. it is not necessary to deposit the money in the bank account

2. while purchasing chairs in cash is ok. but if you do any non-capital expenditure in cash in excess of Rs 20000 at a time, it will be disallowed.




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Querist : Anonymous

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Querist : Anonymous (Querist)
17 November 2014 ok sir . thank you very much .

Sir , if i pay in cash to some one and i buy some goods from that person to sell that goods to make an profit and for that i pay 2 lacs in cash , will be allowed ?


17 November 2014 if the expense made in cash is in excess of Rs 20000, it will be disallowed.

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Querist : Anonymous

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17 November 2014 Nikhil Sir , please tell me , where i did the mistake in whole process..

1) i made an agreement to purchase goods with some one and for that i paid him cash 2 lacs .

2) I used that goods A to sell in market

3) I earned profit after selling that goods

4) I filed ITR , where i showed my profit = sell price - cost price .


17 November 2014 step 1. the purchase will be disallowed.

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Querist : Anonymous

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17 November 2014 If i pay him 2 lacs cash in 10 installment within one month then will it be allowed ?





17 November 2014 yes....if it pertains to a single purchase...

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Querist : Anonymous

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Querist : Anonymous (Querist)
17 November 2014 so where will i have to change legally in my contract agreement...

Since i have make an agreement with that person ... i will have to again make an agreement where i will have to mention that i will pay you 2 lacs in 10 installment within one months .

Will it be ok ?

17 November 2014 you better make the payment in cheque..



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