Limit for cash payment of salary

This query is : Resolved

Sanjay Budhiraja (Querist)
Follow

30 April 2026 Hello all
Pl guide me how much salary we can give to employees in cash during the year as per new provision of income tax u/s 40A(3).
If our company has given salary of 1 Employee for ₹234000/ pa.. per month 19500/ in 2 different days. Is it allowed or disallowed in last FY. ANY PANELTY OR ....
Pl reply
Regards
Sanjay

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

30 April 2026 Cash salary is not banned, but Section 40A(3) restricts deduction where payment or aggregate cash payments to a person exceed ₹10,000 in a single day, unless covered by Rule 6DD exceptions.

Therefore, if salary of ₹19,500 is paid to one employee in cash on one day, the amount may be disallowed under Section 40A(3). If it is paid on two different days and cash payment on each day does not exceed ₹10,000, then technically the per-day limit may not be crossed, but artificial splitting merely to avoid Section 40A(3) is not advisable.

Safer practice is to pay salary through bank transfer/account-payee cheque/UPI etc. and maintain salary register, attendance, appointment/payment records and employee acknowledgement.

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

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

JACOB ABRAHAM KURIALANICKAL

Jitin Aditya Kapur

sachidanandam

Rajesh

Amit Singh

Subscribe Now

Limit for cash payment of salary

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA