Is there is any change in the limit of cash payment in excess of Rs. 20,000/- at a time ? Can a amount in excess of Rs. 20,000/- can be paid in a day/at a time. Pl.clarify.
Don't get confused read further
Sec. 40A(3) of INCOME TAX ACT 1961 says any expenditure in excess of Rs. 20000 shall be disallowed if it is paid by any mode other than an A/c payee cheque or Bank draft.
However, Rule 6DD of Income Tax Rules provides the following EXCEPTIONS -
1. Amount payable to Government
2. Amount payable to Government Authorities and RBI
3. Any amount payable in a place where there is no BANK
4. Amount payable in case of purchase of Cpital Goods (CBDT Circular)
5. Amount payable in case of purchase of goods made under Cottage Industry
6. Amount payable to person involved in Hoticulture or Nursery
7. Amount payable to an employee from superannuation fund if his salary does not exceed fro 7000 p.a.
Further , if you pay an amount exceeding Rs.20000 in one day but in more than one time (say 15000 in one time and 12000 anothet time) then it is not covered under Sec. 40A(3)
Now from tax planning angel you can think of paying sigle bill in two times by saying to your seller (or other person to whom you have to pay) for making two bills for a single trasaction in the name of same person
There is one more way, where you can get made two bills for a single transaction exceeding Rs. 20000 in the name of two persons of your family