Cash payment limit to farmars

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Amandeep Singh (Querist)
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19 July 2019 Dear Sir

A person engaged in business of selling of agricultural product on commission basis, i.e., purchase agricultural produce from farmers and sale it to market via KRISHI MANDI, now as per current notification, no expenses shall be paid in cash in excess of rs.10000. does this transaction of payment for purchase includes in that payment, can he pay rs. 100000 in cash to those farmers ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 July 2019 Payment to farmers can be made in cash, expenditure will not be disallowed under section 40A(3) because payment to farmers is still covered in exemptions given under rule 6DD. However in case you are making payment above 2,00,000 to any farmer, Provisions of new Section 269ST will be applicable and Penalty can be levied on farmer for accepting payment above 2,00,000 in cash since no exemption is given to farmers under Section 269ST.

Amandeep Singh

Amandeep Singh (Querist)
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20 July 2019 Sir,
So thats means We pay Rs.200000/- to farmar Via Cash mode.
one more thing its daily limit or yearly limit

Amandeep Singh

Amandeep Singh (Querist)
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20 July 2019 Sir,
So thats means We pay Rs.200000/- to farmar Via Cash mode.
one more thing its daily limit or yearly limit

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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20 July 2019 Limit for each purchase. Pay less than 2 lacs.

Amandeep Singh

Amandeep Singh (Querist)
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20 July 2019 Thank you Very much Sir,