Purchase of river sand - accounting procedures
This query is : Resolved
10 April 2013
Hi I am doing the audit of a construction company. They are buying river sand from different people ( It is coming under 'unregistered purchase' ). Almost all of them were cash payments and some exceeded 20,000 also. The yearly payments to all of them run to Lakhs of rupees.
The suppliers wont supply us any bill (Local people) and not having PAN.
Should we deduct TDS for payments to such people or such purchases attracts any other tax ? If any other treatments is there kindly let me know.
Kindly reply
The suppliers wont supply us any bill (Local people) and not having PAN.
Should we deduct TDS for payments to such people or such purchases attracts any other tax ? If any other treatments is there kindly let me know.
Kindly reply
11 April 2013
The purchase transactions does not attract the provisions of TDS.
However, the provisions of Sec. 40A(3) regarding the restrictions on the payment in cash exceeding Rs. 20000/- in a day to the same person needs to be kept in mind.
Hence, avoid the paynment in cash and undertake the transactions through Account payee cheque or Bank draft.
However, the provisions of Sec. 40A(3) regarding the restrictions on the payment in cash exceeding Rs. 20000/- in a day to the same person needs to be kept in mind.
Hence, avoid the paynment in cash and undertake the transactions through Account payee cheque or Bank draft.
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