Cash purchase

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This query is : Resolved

rao girwar singh (Querist)

25 October 2012 one of my client is running business of wholesale sale purchase of clothes.

Can he purchase clothes in cash of Rs.500000 at a time.

I mean can he post the whole cash bill in his account or he post a journal entry and then pay the party to less than Rs.20000 daywise ?

CA Pooja Agarwal

CA Pooja Agarwal (Expert)

25 October 2012 cash payment of 5000000 at a time is not allowed..better to pay the party less than 20000 day wise

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)

25 October 2012 Rs. 500000 cash purchases in a single bill/invoice is disallowed under section 40A(3). So no of cash bill purchases not more than Rs.20000 per each per day would be allowable. So if possible take "not more than Rs.20000 bills" from the trader(seller) then no problem. Otherwise take on single bill and issue account payee cheque or DD at the time of purchase or later.

OM SAI SRI SAI JAI JAI SAI

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