Section 40a

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2012 Can we make advance payment in cash, like 3lacs (Rs. 20,000/- per day)to the supplier for purchases to be made? pl. reply considering section 40A of Income Tax Act. i want to know whether anyone can make advance cash payment of Rs. 20,000/- per day, regularly for 15 days. i.e rs. 3lacs in 15 days for purchase to be made.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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25 May 2012 No, payment can not be made in excess on Rs. 20000 per day. If it is made then disallowance will be made in the year in which expense is claimed.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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25 May 2012 If per day amount less than rs. 20,000/- is paid would no disallowance would be called for but should be avoided as the same is very difficult to prove before the Income tax audthorities.

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