Calculation of Cash Receipt And Cash Payment for purpose of section 44AB

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varun bhakkad (Querist)
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28 October 2021 Hello
Can anyone guide me regarding :- How to Compute 5% Cash Transactions Limit For Tax Audit U/s 44AB ???

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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28 October 2021 The limit of 5% receipt in cash or payments in cash is not limited to sale or purchase transactions. It rather covers all receipts and payments in cash including sales and purchases.

In general receipts in cash of the following nature are included-

Receipt on Sale of goods and services
Receipt from debtors for the current year sales/outstanding receivables from earlier years
Sale of fixed assets
Sale of scrap
Receipt of Loans and Advances
Trade advances
Receipt of deposits
Sale of investments

Some typical payments in cash of a business concern included are-
Payments for Purchases
Payment to Creditors for current year purchases/outstanding creditors
Purchase of Fixed Assets and other Capital Expenditure
Payments for salary, electricity, telephone charges, and other revenue expenditure
Payments for Insurance
Repayment of Loans and Advances
Loans given
Trade Advances given
Deposits made, etc.

In computing the turnover limit of 5% in cash, the law states that the aggregate of all receipts in cash and aggregate of all payments in cash shall not exceed 5% of total receipts and payments.

varun bhakkad

varun bhakkad (Querist)
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28 October 2021 Thank you sir for a very well reply

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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28 October 2021 My Pleasure..

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