08 April 2017
w.e.f. 01.04.2017 the limit for cash payment in respect of an expenditure is reduced to Rs 10000/- instead of Rs 20000/-. The disallowance u/s 40A(3) pertains to not only a single or aggregate payment but also in respect of an 'expenditure' Thus in other words for the purposes of section 40A(3) both the payment and amount of bill i.e. expenditure should not exceed Rs 10000/- even if payment is made on different dates. There is a tribunal ruling to this effect in the case of Raja & Co. v. CIT [2014] 64 SOT 12 (Cochin).
I am confused now that what advice should be followed. In this regard kindly clear following queries: 1. If a single bill is more than Rs.10,000/-, in case shall that be disallowed if is paid in cash?
2. Is there any threshold limit for cash payment to a particular person during the financial year, i.e. if a company pay in cash (every payment is below Rs.10,000/-) to a small vendor or to rickshaw puller for loading & unloading aggregating Rs.30,000/- during the year, in case shall that be disallowed?
3. If a bill of Rs.50,000/- and is paid in cash on several dates below Rs.10,000/-, in case shall that be disallowed ?
08 April 2017
1 As per tribunal decision here the payment in a day not exceed 10000 hence no disallowance. 2 No thereshold for a year, the amount of 30000 paid to richshaw will be allowed. 3 No disallowance as cash payment in a day not exceed 10000.
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