Income Tax Cash Purchase Limit

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This discussion clarifies the cash expense limit for income tax purposes, specifically regarding the purchase of goods. While there isn't a direct prohibition on paying cash for purchases over £10,000, such payments may not be deductible under Section 40A(3). For receipts, cash payments exceeding £2 lakh in a single transaction are prohibited under Section 269ST, with penalties for violations. The presumptive taxation scheme under Section 44AD does not alter these rules for cash expenses.

Javed Memon

Javed Memon (Querist)

21 February 2024 Respected Sir

The Cash Expenses Limit in Income tax is Rs.10,000

My first question is - is this limit Include Purchase of goods
If we Purchase goods for sale more than 10,000 then we have to pay this amount other than Cash ???

And the Second question is if we declare our income under presumptive u/s 44ad than also this rules are applicable ???

RAJA P M

RAJA P M (Expert)

21 February 2024 2nd question, No issues. this is not applicable...

Message likes : 1 times

RAJA P M

RAJA P M (Expert)

21 February 2024 For 1st question, above 10k cash is restricted. If purchase exceeds above 10k then yes You must be pay through banking mode....

Message likes : 1 times

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

16 August 2025 For Purchases: While there's no explicit limit on the amount that can be paid in cash for purchases, payments exceeding ₹10,000 in cash for business-related expenses may not be deductible under Section 40A(3).
For Receipts: Receiving cash payments exceeding ₹2 lakh in a single transaction, on a single day, or for a single event or occasion is prohibited under Section 269ST.
eduhometax.com
+7
Kotak Life
+7
IndiaFilings
+7
Penalty for Violation: Violating the provisions of Section 269ST can result in a penalty equal to the amount received in cash in contravention of the section.

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