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Cash payment more than 20000/-

SHIWANI (Sr. Accountant) (33 Points)

02 January 2012

Could anyone inform me that the limit of single cash transaction is increased from 20,000/- to 30,000/-??? and if not what will the add back/cash disallow if we made the single tranaction more than the specified amount as per Income tax act???

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18 Replies

Sagar Devani (Corporate and International Taxation) (1174 Points)
Replied 02 January 2012

As per the income tax act if any cash payment is made above Rs.20,000/- entire about is disallowed

KARANDEEP,CA,B.Com,CS FNL (JOB) (457 Points)
Replied 02 January 2012

Yes,if u made the payment more than the spefied limit which is Rs.20000/-,then you have to add back the same.

Thanks & Regards

Karandeep

suchit shah (Dy. Manager(Finance & Accounts)) (208 Points)
Replied 02 January 2012

under section 40 A 3 limit is only 20000/- per day per person ... n that increased limit is for transporters which is 35000/- per day per person.... if an expense has been done for more than 20000/- in a day in cash then whole expenditure will be disallowed................

4 Like

CA SANDESH MAHIPAL (Practicing in GST and MSME ) (1985 Points)
Replied 02 January 2012

SAME AS SAID BY MR. SUCHIT

Parashar (Company Secretary 2004) (1013 Points)
Replied 02 January 2012

Originally posted by : SUNNY AGGARWAL
	SAME AS SAID BY MR. SUCHIT

CA SANKET AGGARWAL (Professional Consultant) (139 Points)
Replied 02 January 2012

Full amount will be add back in case of payment greater then 20000 in cash/Bearer Cheque.

ie if you are making payment of 30,000 then full amount 30000 will be disallowed.

Rajesh (student) (167 Points)
Replied 02 January 2012

1- Section 40A(3) a It provides that any expenditure incurred as a payment in sum of exceeding Rs.20000/- otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, shall not be allowed as a deduction. However if payment is being made for hiring or leasing, the limit is 35000.

2- Section 40A(3)(B) It also provides that the payment will be deemed as profits of the business if the expenditure incurred in the books but payment is made exceeding Rs. 20000 in cash, otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS.

3- Section 40A (3) It provides that the payment in a single day should not be exceeding Rs. 20000. It doesn’t mean the single payment shouldn’t 20000 but the aggregate amount should not exceed the limit. Some parties split high value payment into several cash payment for evasion of section 40A (3) a, so this rule is for evasion of payments.

4- There is also a rule that payment made to a person in a single day, otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, exceeds the limit; the payment will be deemed as profits of the company according to proposed sub-section (3) of section 40(A).

2 Like

srinivass (CA Final) (2466 Points)
Replied 03 January 2012

Originally posted by : Rajesh
	1- Section 40A(3) a It provides that any expenditure incurred as a payment in sum of exceeding Rs. 20000/- otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, shall not be allowed as a deduction. However if payment is being made for hiring or leasing, the limit is 35000. 2- Section 40A(3)(B) It also provides that the payment will be deemed as profits of the business if the expenditure incurred in the books but payment is made exceeding Rs. 20000 in cash, otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS. 3- Section 40A (3) It provides that the payment in a single day should not be exceeding Rs. 20000. It doesn’t mean the single payment shouldn’t 20000 but the aggregate amount should not exceed the limit. Some parties split high value payment into several cash payment for evasion of section 40A (3) a, so this rule is for evasion of payments. 4- There is also a rule that payment made to a person in a single day, otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, exceeds the limit; the payment will be deemed as profits of the company according to proposed sub-section (3) of section 40(A).

Gulshan Kumar (Professional Accountant) (119 Points)
Replied 04 January 2012

not paid in cash more than Rs.20,000/- in a single day per person

Aswadh Kota Ragala (CA) (85 Points)
Replied 06 January 2012

As per Section 40A (3), payment in a single day should not be exceedingRs. 20000. It doesn’t mean the single payment shouldn’t 20000 but the aggregate amount should not exceed the limit. Some parties split high value payment into several cash payment for evasion of section 40A (3) a, so this rule is for evasion of payments only.