Disallowance of cash payment expenses

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Sidhardh (Querist)

18 November 2011 Dear Experts,

I would like to know the following:

1. Cash payment >=20,000/- will be disallowed or >20,000/- only will be disallowed?

2. If Freight Paid in Cash more than Rs.20,000/- to a person in a single day against different invoices will be disallowed or allowed? Any exception to payment of freight in cash u/s 40(A)(3)?

3. Some experts are telling that, cash payment limit to a party per day increased from Rs.20,000/- to Rs.30,000/-. Is it true? What is the effective date of this amendment?

Thanks in Advance.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

18 November 2011 1) section attracts if cash payment exceeds Rs.20,000/-
2) & 3) 40A(3) has to be verified per person per day. In case of freight, the ceiling is increased to Rs.35,000/- by the Finance (no.2)Act,2009 w.e.f 1/10/2009.

Sidhardh

Sidhardh (Querist)

18 November 2011 Thank very much you sir.

But, I am unable to get the copy of notification for increment of ceiling in any website. Can u please share the link with me.

Thanks.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

18 November 2011 It is not notification. Amendment has been made in the section itself which can be seen through www.incometaxindia.gov.in

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