Cash Received in Bank Account

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A dairy business with a turnover of approximately £250 crores is receiving daily cash payments from distributors for milk supplies, with individual transactions under £200,000. While not strictly against the rules, this practice may attract scrutiny from the IT department. It's recommended that distributors use their own bank accounts and transfer funds via RTGS/IMPS for a more compliant and transparent process, especially as some larger distributors already do this.

Ashish Kumar Pandey

Ashish Kumar Pandey (Querist)
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27 December 2024 Dear Sir,

If a company running Milk and Dairy product business Turnover 250 Crores Approx.
Appoint distributors for sales of milk products.
Company raised invoices to distributors for milk supply and collect payment from distributors in cash which is deposited directly by distributor in company bank account on daily basis.
Note:-Cash collection from each distributors is less than Rs. 200000/- Lacs in a single day/transactions.
This procedure is correct or not.
If not then advice correct procedure
Please advice.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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27 December 2024 Though not against the rule, but better would be to ask distributor/s to open their own bank account and transfer the bill payment by any of banking channel like RTGS/IMPS etc. That would be correct procedure,

Ashish Kumar Pandey

Ashish Kumar Pandey (Querist)
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01 January 2025 Thanks Sir,
Some big distributors already adopt this process because they are use his own fund for payment.
but other than collect payment from retailers/shops after that cash deposited to company bank account against sale of milk.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 January 2025 Yes, but such activity attract suspicion and as such query from ITD; so keep proper documentations and confirmations from related parties to justify the cash deposits in your bank account.

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