Advance salary paid to employee in cash

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Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2016 Dear Sir, please tell me is there any possibility of consequences if the company has paid advance salary Rs. 50000/- to employee in cash however i have passed the following entry for the same.. Advance to employee Dr. 50000 (current assets) To Cash..50000 pls clarify is it allowed in income tax, Regard Rajeev Jaiswal

Amol S Joglekar

Amol S Joglekar (Expert)
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22 July 2016 no that is not allowed.

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2016 Sir, can you pls let me know why it is not allowed. we are not written in debit side of profit & loss

Amol S Joglekar

Amol S Joglekar (Expert)
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22 July 2016 you mean to say...you are not claiming it as EXPENSES towards SALARY?
How will you transfer the said amount to SALARY? Can you please explain?

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2016 sir, while giving 50000/- advance in Cash we have booked it in current assets side as it is advance. Rs. 5000 PM will be trf in salary accounts.... i.e employee salary is Rs. 20000/- PM only 15000 PM will be paid to him and Rs. 5000 PM will be adjust from Advance till 10 month,

Amol S Joglekar

Amol S Joglekar (Expert)
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22 July 2016 https://www.incometaxindia.gov.in/_layouts/15/dit/pages/viewer.aspx?grp=rule&cname=cmsid&cval=103120000000007136&k=&isdlg=1

please follow the link for further clarification. Tell me if your case as explained above fits into rule 6DD(h) or 6DD(i).

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2016 sir,
neither rule 6DD(H) nor 6DD(I) will be applicable to that said employee because he is not being terminate/retire or shifted to any other place,

Amol S Joglekar

Amol S Joglekar (Expert)
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22 July 2016 yes. So section 40A(3) is applicable in your case, no matter whether you route the entry through current asset or otherwise.

Querist : Anonymous

Querist : Anonymous (Querist)

25 August 2016 Sir one more query, can i pay cash expenses exceed 20000 in single day, 18000 cash salary to employee and stationery purchased in cash Rs. 3500 , is it allowable exceed cash expenses 20000 in single day

Amol S Joglekar

Amol S Joglekar (Expert)
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26 August 2016 yes.....you can do that....the money is given on 2 different purposes, although the person is SAME.....

Querist : Anonymous

Querist : Anonymous (Querist)

26 August 2016 Sir, persons are not same its different persons, salary was given to employee and stationery was purchased from srationery's shop, my doubt is on cash payment exceed 20000/- in single day to two different persons,

Amol S Joglekar

Amol S Joglekar (Expert)
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26 August 2016 it is allowed.....one is salary... which is less than 20k...... another is printing & stationery...which is also less than 20k

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