Cash payment limit
This query is : Resolved
05 July 2012
Whether the cash payment limit related to only expenses or cash deposit also.
Please help on this query.
Please help on this query.
05 July 2012
cash payment limit only relate to expenses.
cash payment limit for particular expenses is rs 20000 in a particular day.
cash payment limit for particular expenses is rs 20000 in a particular day.
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05 July 2012
Is this cash payment limit is for single transaction per day or total transactions in a day?
05 July 2012
Disallowance u/s. 40A( 3) is applicable for each payment and not for the aggregate of the various payments made to same party during one day: The Assessee’s plea against the disallowance u/s. 40A(3) was that each payment was below, Rs.20,000/-, and, therefore, Sec. 40A(3) is not applicable. However, as per the A.O., since the payment of one day exceeded Rs. 20,000/-, therefore, Sec. 40A( 3) was applicable.
05 July 2012
Example- TWO BILL RAISED ON 04/06/12
FIRST RS---------RS40000
SECOND------------RS25000
PAYMENT ON 06/06/12 RS 15000 AGAINST FIRST BILL
RS 18000 AGAINST SECOND BILL TO SAME PARTY.
BOTH ARE ALLOWED.
FIRST RS---------RS40000
SECOND------------RS25000
PAYMENT ON 06/06/12 RS 15000 AGAINST FIRST BILL
RS 18000 AGAINST SECOND BILL TO SAME PARTY.
BOTH ARE ALLOWED.
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05 July 2012
Section 40A(3) reads as under:
"Where the assessee incurs any expenditure in respect of which a payment or AGGREGATE of payments made to a person in A DAY ........"
As is clear from the above wordings that if an assessee makes multiple payments to a person in ONE SINGLE DAY otherwise than by an account payee cheque AND the AGGREGATE of such payments exceeds Rs. 20,000 the expense shall be DISALLOWED.
"Where the assessee incurs any expenditure in respect of which a payment or AGGREGATE of payments made to a person in A DAY ........"
As is clear from the above wordings that if an assessee makes multiple payments to a person in ONE SINGLE DAY otherwise than by an account payee cheque AND the AGGREGATE of such payments exceeds Rs. 20,000 the expense shall be DISALLOWED.
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