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Section 40a(3)_applicability for reimbursement

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Querist : Anonymous

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Querist : Anonymous (Querist)
24 November 2017 Hello

As per Sec 40A(3), any payment made to a person exceeding Rs. 10,000 is disallowed for deduction for tax calculation.

However, in case cash payment is made to an employee in the form of reimbursement of office expenses exceeding Rs. 10,000 (Es. Rs. 15,000) in respect of 5 different expenses each of 5 expenses which were less than Rs. 10,000. Will the company get deduction for such reimbursement (booked as expense by company)?

Thanks in advance
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Ashiwini Ballodia

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Ashiwini Ballodia (Expert)
24 November 2017 Better make payment in 2 date. Rs.10000 limit is for per person per day and it is not seen on individual invoice wise
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CA Shubhanshu Jain

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CA Shubhanshu Jain (Expert)
25 November 2017 There is no problem in making employee reimbursement in cash for more than Rs. 10000, because section 40A(3) says "if payment made towards AN expense is more than Rs. 10000" and employee reimbursements are towards more than one expense, but it is still advisable not to make payment of more than Rs. 10000 even towards employee reimbursements
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
25 November 2017 Section 40A(3) squarely applies to expenses reimbursed by employer to employee . Inference - rule 6DD.
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