cash in excess of 20000/- section 40A3

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dipul mehta(swadhin) (Querist)

10 June 2011 sir,
one company purcahsae raw material and add carraige (in) to raw material. carraige in are paid in cash more than 20000/- can it will attract Section 40A(3) of IT ?
carraige in are added to raw material cost can it make any difference. plz clarify soon

Kumar Babu.G

Kumar Babu.G (Expert)

10 June 2011 As per section, all payments to a single person on a single day should n't exceed Rs.20000,if it exceeds Rs.20000 such expenditure is disallowed.Means Sec 40A(3) applies to this case also.

Rakesh Jain

Rakesh Jain (Expert)

10 June 2011 Dear Dipul,

I am not agree with the opinion of Mr. Kumar Babu G.

In your case the limit of amount for disallowance under sec 40A(3) or 40A(3A) shall be Rs. 35000/- if the cash payment exceed 35k than only it ll be considered as disallowance. So In your cash the if the payment is more than 35K than only it shall fall under the provision of Sec 40A(3) or 40A(3A).

With Regards,

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