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Cash advance payment exceeding rs. 20000

Gourish (Accountant ) (41 Points)

13 October 2015

Cash payment made to the employee more than Rs. 20000 for making payment for Road Tax of New Vehicle. Is it disallowed under IT Act.

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10 Replies

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 13 October 2015

u wil make the entry on the name of employee .. or the vehicle is owned by the company and payment is for this only...

Because staff advance exceeding 20000 will attract section 269SS and 269TT

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 13 October 2015

In case of New Vehicle, the registration work is done by Vendor/dealer, why should the payment would go in hands of employee?

also it is not clear with the query that vehicle is in name of employer company or in name of employee?

However its always to be kept in mind that during such payments copies of document should get attached with the voucher, so that at the time of audit or assessment, it should get relief from tax burden

CA Srikanth Yadav (Chartered Accountant) (3162 Points)
Replied 13 October 2015

If it is given as a loan to the employee, then Section 269SS will apply. If not, then section 40A(3) since it will be a salary expenditure in that case.

RAHULSMITTAL (Partner, V Mittal & Co) (252 Points)
Replied 13 October 2015

It is purely related to capital asset. The amount of road tax paid while buying vehicle is for life time and it must be capitalised. You can pay 20000 rs or more for buying capital asset. Paying to employee does not matter in this case.

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R.PARTHIBAN (student) (31 Points)
Replied 14 October 2015

AGREE

Vivek Sharma (Chartered Accountant) (34 Points)
Replied 15 October 2015

Accordign to Section 269 SS there is a prohibition on acceptance of loan or deposit in cash by a person and Section 269 T talks about the repayment of the same. As such as per my opinion advance given by the company is neither covered by Section 269SS nor 269T. Yes the matter cah be analysed form the point of the employee.