Limit for cash payment of salary
This query is : Resolved
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
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
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.
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
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Post Office RD Interest
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Building and other construction workers welfare cess act 1996
- Eway bill for machinery reparing
- ITR 3 FILING OF AN INDIVIDUAL (PARTNER IN A PARTNERSHIP fIRM)
- Gift of mutual fund units to daughter
- Bank Accounts in Balance Sheet for ITR 3
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
