02 January 2012
Hi, my Query is that the client has a business of productions of serial and films for which he pay to his employee Rs. 50000 , 125000 ,30000 like that through cash in single day to meet the production expenses ...is this payment is disallowed or not?
Guest
Guest
(Expert)
04 January 2012
You should segregate the Salary / Remuneration from the "Out of Pocket expenses" incurred by the Employee which are to be accounted as Expenses under different heads. It is advisable to route the Salary / Remuneration seperately by way of cheque payment with proper deduction of Profession Tax, PF, and TDS thereon. Production Expenses backed by proper supporting documentary evidence are allowable. Adhoc cash payments will be treated as "Advance to Employee" to be reversed as and when the expense(s) are booked.
Guest
Guest
(Expert)
04 January 2012
Educate the Company Management that cash expenses above Rs. 20,000/- per day are scrutinized by the Assessing Officer, and there is a possibility of them being disallowed during the assessment.
Try and persuade the Company Management to negotiate with suppliers of materials and services to bill the Company on weekly, fortnightly, or monthly basis and submit Invoices to be settled by cheque payment only. It will help in proper Cash flow management as well.
CAclubindia
