Cash payment to formers

This query is : Resolved

NANDAN (Querist)
Follow

06 July 2018 Dear sir/ madam, My business turnover is above 2 crore in the previous year can i pay cash to formers up to 2 lacks?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

06 July 2018 In this context, it is stated that the provisions of section 40A (3) of the Income-tax Act, 1961 ('the Act') provides for the disallowances of expenditure exceeding Rs. 10000 made otherwise than by an account payee cheque/draft or use of electronic clearing system through a bank account. However, rule 6DD of the Income-tax Rules, 1962 ('IT Rules') carves out certain exceptions from application of the provisions of section 40A (3) in some specific cases and circumstances, which inter alia include payments made for purchase of agricultural produce to the cultivators of such produce. Therefore, no disallowance under section 40A (3) of the Act can be made if the trader makes cash purchases of agricultural produce from the cultivator.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now