CASH PAYMENT TO PERSON

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This discussion clarifies the rules around paying back rental advances in cash. The main concern is whether paying Rs. 10,000 per day in cash to a tenant is permissible or if it violates Section 40A(3) of the Income Tax Act, which limits cash payments. It's noted that Section 40A(3) typically applies to expenses, not advances, and there's a general limit for cash payments, but specific exceptions or interpretations might apply.

raghavendra b

raghavendra b (Querist)
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22 March 2021 DEAR SIR,

ONE OF MY CLIENT RETURNED HIS RENTAL ADVANCE AMOUNT TO HIS TENANT PER DAY 10000/- 10 DAYS TOTAL 100000/- BECAUSE HE DOES NOT ACCEPT CHEQUE OR DD. SO IN THIS CASE CAN WE PAY RS.10000/- IN A SINGLE DAY SINGLE PERSON? OR ATTRACT DISSALLOW U/S 40 A(3). UNDER THIS SECTION PROVISION ONLY FOR SINGLE DAY, SINGLE TRANSACTION FOR ONE PERSON. NEXT DAY WE CAN PAY CASH OR WE SHOULD PAY IN CHEQUE THIS SECTION ALLOWS ONLY FOR ONE DAY FOR ENTIRE FINANCIAL YEAR.

CLARIFY ME

REGARDS

PLEASE CLARIFY ME,

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 March 2021 Return of rental advance 10000 limit not applicable. Less than 2 lacs can be paid in cash.

raghavendra b

raghavendra b (Querist)
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22 March 2021 thank you sir,

the amount of returned will attract u/s 40a(3), some other c a told to my client and dissallowed entire amount. he just paid in cash because of he does not accept any dd or cheque because he is not a i t payer. only rs 10000/- accounted and remaining dissallowed as per section 40 a(3). this is correct way to account.

regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 March 2021 Section 40a(3) applicable only on expenses and not applicable on advances

raghavendra b

raghavendra b (Querist)
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23 March 2021 THANK YOU SIR

REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 March 2021 You are welcome......

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