Shuhaib S (Finance and Accounts Incharge) (36 Points)
04 April 2017Under Sec40A(3) Any expenditure payment to a single vendor in single day more than Rs 10000 will disallow. If an expense amounting Rs 30000 payed by cash Rs 10k each in 3 days attract same disallowance???. If yes what is the validity of this sec, Since we can record even if we pay 30k in particular day but we record it in our books account as 3 payment in 3 seperate day.
varsha naik
(Chartered Accountant)
(303 Points)
Replied 05 April 2017
Reduction in Limit under section 40A(3A) Cash payment limit has been reduced from Rs. 20000 to Rs. 10000 If any person pays in cash exceeding Rs. 10000 in a day shall not be allowed as deduction in computation of Income from "Profits and gains of business or profession
Dhrunil Bhatt
(Chartered Accountant)
(232 Points)
Replied 12 April 2017
Dear Shuhaibh,
In reference to your question, following two situations can be possible:
(1) You have paid a sum of Rs. 30,000 in a single day to a single person.
(2) You have paid a sum of Rs. 30,000 to a single person on different dates (each payment doesnot exceed Rs. 10,000)
If your situation falls under (1) above, then entire amount of Rs. 30,000 would get disallowed under section 40A(3) and would be added to your PGBP Income
If your situation falls under (2) above, nothing would be disallowed under section 40A(3).
Hope that above explanation clears your doubt.
Thanks and Regards,
Dhrunil Bhatt
Shuhaib S
(Finance and Accounts Incharge)
(36 Points)
Replied 13 April 2017
Thanks Dhruth, but if we can adjust so, what is the validity of the sec 40A(3), even if we paid Rs 30000 in a single day , we can record it as 10k each in 3 days in our books of account.I think there is no bill to bill checking regarding cash payment from Income tax department.
Dhrunil Bhatt
(Chartered Accountant)
(232 Points)
Replied 13 April 2017
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