Sirs
ours is a Private company we want to buy second hand two wheeler from a 3rd person , is it necessary that this payment transaction should be done through bank ? Or cash can be given ?
RGDS
Prasad
Prasad (B.Com) (26 Points)
01 September 2014Sirs
ours is a Private company we want to buy second hand two wheeler from a 3rd person , is it necessary that this payment transaction should be done through bank ? Or cash can be given ?
RGDS
Prasad
Ashish Tewani
(CA Final Article at V.P. Mehta & Co.)
(83 Points)
Replied 02 September 2014
Not any necessity, but through bank it would be better.
Yogendra.C
(CA - Inter BIlling Executive)
(37 Points)
Replied 05 September 2014
Agreed with Ashish,
As Bank transaction gives more transparent views & which also can act as a proof for the payments.
Ravi Chandra
(CA FINAL)
(98 Points)
Replied 06 September 2014
You shall pay the amount to third person through Bank or Cash if the Sale consideration is less than Rs 20000/-. According to Section 40A(3) of Income tax act 1961.any payment to single person on a single day which exceeds Rs 20000/- shall be disallowd as expenditure for income tax purposes. If the amount payable is greater than Rs 20000/- then pay through bank or cash in installments less than Rs 20000/- on different days.
Rahul Kumar
(ARTICLE ASSISTENT)
(147 Points)
Replied 06 September 2014
I agree with ravi chandra
PARV
(TAX ASSISTANT.)
(202 Points)
Replied 06 September 2014
Hello Ravi,
I read Sec 40A(3), it speaks about expenditure, not for assets. I think they can make payment by cash exceeding Rs.20k for asset.
Rama chary Rachakonda
(Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)
(3303 Points)
Replied 07 September 2014
Section 40A(3) of Income tax Act, 1961 read as follows Section 40A(3) Where an assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. There is no specified for expenditure to get assets.
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