sec 40a(3)
This query is : Resolved
19 June 2007
u/s 40a(3)of income tax act it is stated that cash payment limit is 20,000 for the any business exp. except the transactions given in rule 6dd,i want to know that the limit is per transaction or per person at one time?if there is purchase exp.for rs.76,000 and if i want to pay whole amt in cash to one person then what to do?can i make bifercation of that amt in 4 transaction for payment to the same person?can i purchase for more than 20,000 in cash from the one person?
19 June 2007
The term used is "any expenditure in respect of which payment is made " indicates only payments transactions. Your payment should not exceed the specified limit.
19 June 2007
but there is a query that can i make bifecate those 76,000 in 4 payments to the same person?is it right?
20 June 2007
As per sec. 40(A)3, any expenditure exceeding Rs. 20000, is not allwed to be made in cash.So, the amt. of Rs.20000 cannot be made in four instalmentsfor same transaction.The section says expenditure, so even purchases are also covered.
21 June 2007
so the limit of 20000 is for one day limit to the particular person?can i make the payment in cash to that particular person next day.e.g. for total exp.of rs.32000 can i give oneself 20000 on the first day and remainning 12000 on the second day?i will say to make two bills for that particular amts.,that will do or not?i am not paying in installments i am paying for the one expenditure but by making its two bills,i will not cross the 20000 rs of amt limit
21 June 2007
It is not a limit for particular day, actually it cover to the particular transaction. Accordinglly the payment cannot be bifurcate. For Example suppose a bill of Rs. 32,000 u cannot pay the amount of Rs. 20,000 on 1st day and 12000 on 2nd day and if 4 bills of Rs. 10000 have to pay for. u can make payment in cash at the same time for these 4 bills.
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