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Cash salary more than 20000

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08 June 2009 If a company pays Wages in Cash to its workers totalling Rs 100000/- in a single day but not single person gets more than Rs 20000/-. Will this expense be allowed or not? What if Company first transfers the amt to one of its staff as Imperest to Staff and then salary payment entry is routed through his Imperest A/c?
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krishnan

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krishnan (Expert)
08 June 2009 Section 40A(3) read with rule 6DD disallows expenditure if payments in excess of Rs.20000 is made otherwise than by way of crossed cheque/dd . The word payment is important. If payment to any worker does not exceed Rs.20000 though the overall expenditure on wages account is Rs 100000 on a single day , the entire expenditure is deductible.
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Manmohan ACA, CS

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Manmohan ACA, CS (Expert)
08 June 2009 yes, the sum will be allowed
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