Payment to sub contractors

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siva krishna (Querist)

18 February 2011 Dear Experts,
In our books opening balance of sub contractors is showing Rs 4,75,000/- and this year we have huge cash-in-hand balance so can we pay off the entire sub contractors dues by cash or is there any conditions for cash payments. We already paid the TDS on the subcontractors amounts.

Thanks in advance

Sunil Kr. Sanganeria

Sunil Kr. Sanganeria (Expert)

18 February 2011 Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction.However if payment is being made for plying, hiring or leasing goods carriages then Limit for these section is Rs 35000/-,instead Of 20000/-

If you pay in cash, expenses will be disallowable.

Better you deposit the money in Bank and issue cheque.

siva krishna

siva krishna (Querist)

18 February 2011 suppose each time if we paid below Rs 20,000 then what is the impact

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