disallowance of cash above rs 20000

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Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2010 if we pay cash of more then 20000 to an employee and debit his imprest a/c
after that employee incurs expenses
case 1 of more than 20000
case 2 upto 20000
is it disallowed in both the case?

and also if we pay cash upto Rs 20000
and debit his imprest a/c and after that he incur expenses of more than Rs 20000
is it disallowed ?

Deepak Narayanan

Deepak Narayanan (Expert)
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17 January 2010 Hai,

As per Sec 40A(3) expenditure in excess of Rs 20,000 is disallowed.

Payments made to employee as imprest money is treated as advance and not as expenses hence 40A(3) will not attract.

Payments made from imprest account are for expenses and hence those payments should not be more than Rs 20,000. Sec40A(3) will attract payments made from imprest account.

Hope this will clarify, please revert/

Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2010 thanks sir
can u also tell me whether cash paid by employee for more than 20000 for different expenses in one time will also attract SEC40A3

Deepak Narayanan

Deepak Narayanan (Expert)
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18 January 2010 Payment to single party above Rs 20000 is disallowed

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