Is it necessary to deposit in a bank , if you earn ?

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Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2014 respected experts ,

I am a regular tax payer . i earn through my skills . i teach , i provide consultancy , i run a computer center etc etc ... i also file an income tax every year , but i never deposit money in my bank account . i use that money for expansion of my small institute , for my and my family expenses and hold some money in home and very few in my bank account .

Is it compulsion to deposit all money whatever i earned through my profession and then i should withdraw money .

while filing ITR , i have mentioned my bank account details .

Is it really necessary to use that account ?
Is it necessary to deposit all amount in that account ?
Is it necessary to perform transaction only from that account ?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 September 2014 1. No it is not compulsory to keep money in bank account.

2. however, if the expenses incurred by you in cash are getting covered under 40a(3), then such expenses wont be allowed while computing tax liability

3. It is not necessary to use this account

4. Answer to other two questions have been already answered as deduction from above three numbered replies.

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2014 ok sir . really helpful suggestion .

Sir If i invest in my profession whatever i earned through my profession then that amount will be deducted from my income while computing tax on my income .

Suppose , i teach in my coaching and i earn 3 lacs from there in a year . if i invest half of the money for expansion of coaching , will this amount deducted from my income ?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 September 2014 yes. but any expenditure made in cash in excess of Rs 20000 can be disallowed.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 September 2014 yes. but any expenditure made in cash in excess of Rs 20000 can be disallowed.

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2014 Sir 20000 is fixed ? If i earn in a year more than 5 or 10 lacs then will expense limit increase ? or will it be same for any size of income ?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 September 2014 each expense of Rs 20000 paid in cash in a day is disallowed.

for eg: you pay salary to an employee in cash Rs 21000. So whole of it will be disallowed.

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2014 if i pay 15000 to 3 different employee in 3 consecutive day then will it be tax free ?