Disallowance of certain expenses

This query is : Resolved

Rashmi Trivedi (Querist)
Follow

31 March 2015 Is the payment made for Franking disallowed under the section 40A(3) if it is exceeding Rs.20,000 and made in cash?

Thanks in advance.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
Follow

31 March 2015 if you are not covered by rule 6DD listed as follows then will be disallowed;

Exception-Rule 6DD

No disallowance shall be made under sec 40a(3) in the following situations:
When payment is made on the day when there is bank holiday or strike.
When payment is made to a person who resides or does business in a village where there is no bank facility.

When payment is made to government and it is required to pay in cash. Like deposits, tax to government.

When payment is made to
Reserve Bank of India,
state bank of India,

Co-operative bank or land mortgage bank,
any primary agriculture credit society

LIC

5. Where the payment is for the purchase of manufactured products and power was not used in production.

6. Where payment is made by way of book adjustment

7. Where payment is for following purchases
Agriculture or forest products
Animal husbandry or poultry farming products
Fish products or fish
Agiculture or horticulture products

8. Where the payment is made by
Letter of credit arrangement via bank
Mail or telegraphic transfer
Book adjustment in bank
Bill of exchange payable to a bank
Credit card or debit card
Electronic transfer

9. When payment is for gratuity or retrenchment compensation to employee or his legal heirs and salary of the employee does not exceed Rs 50000

10. When the payment is for employee’s salary after deducting TDS and when such employee

Is transferred to place other than his normal place of duty or on ship for fifteen days or more.

And he does not maintain bank account at that place or ship

11. Where the payment is to agent by principal where agent has to pay in cash for goods and services on behalf of principal.

12. Where payment is made by money changer for purchasing of foreign currency or traveler’s cheque.

Rashmi Trivedi

Rashmi Trivedi (Querist)
Follow

31 March 2015 Shall Franking be considered as a payment to Government?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
Follow

31 March 2015 There are private banks like KAPOOL bank which also does franking work so i dont think its payment to government.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now