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This discussion clarifies tax implications for business expenses, particularly concerning cash purchases. Expenses made from unregistered dealers are generally allowed for income tax. However, there's a strict daily cash payment limit of £10,000 per person for most business expenses to be deductible. Payments exceeding this limit, or £35,000 for transporters, may be disallowed, increasing your taxable income.

deepak

deepak (Querist)
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29 June 2025 If purchased from unregistered dealer, purchase expenses are allowed in income tax?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 June 2025 Yes, allowed. (from GST unregistered)

deepak

deepak (Querist)
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29 June 2025 What is cash purchase of goods and services limit in business per day in income tax act?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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30 June 2025 Rs. 10,000/- per person per day.

deepak

deepak (Querist)
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30 June 2025 What about less than 2 lac for cash payment per day allowed? Can we purchase goods in cash 150000 per day?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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30 June 2025 Cash Payments for Business Expenses (Section 40A(3)) IT act:

Limit: A business cannot claim a tax deduction for any expense exceeding INR 10,000 made in cash to a single person in a single day.
Exception: This limit is increased to INR 35,000 for cash payments made to transporters for hiring, leasing, or plying goods vehicles.
Implication: If you make a cash payment above these limits, the entire expense will be disallowed as a deduction, increasing your taxable income.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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27 September 2025 Good luck..

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