Society expense bill

This query is : Resolved

Ashwani Chhabra (Querist)
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19 October 2014 Our society for Resident welfare is collecting Maintenance Charges from members every month to the tune of Rs.2.00 Lac per month total collection.
My query is that society is making payments of Kacha Bills without mentioning the name of supplier,vendor. Only item name and price is mention. No tax amount mention.
1. Is it valid /authrised payment in cash?
2. Is it not a evasion of tax which may arise lateron.
3. Is it a valid proof /supportive document for making payments of Rs.10000/- and above.
4. Society Auditor is to point out this anomalies or members to take care.

Ashwani Chhabra

Ashwani Chhabra (Querist)
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19 October 2014 Request for clarify my doubts. Please send me experts opinion.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 Here’s a detailed response to your query about **society expenses and bills**:

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### 1. Is it valid/authorized payment in cash without supplier details?

* **No**, payments without proper bills or invoices mentioning the vendor/supplier’s name are **not advisable**.
* Generally, for payments above Rs.10,000, proper bills with vendor details should be maintained.
* Society being a registered entity must follow sound financial practices to maintain transparency.

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### 2. Is it tax evasion risk?

* Yes, **lack of proper bills/invoices may lead to suspicion of tax evasion or unaccounted expenses**.
* Without vendor details and tax amounts, the society cannot claim or validate any GST or other taxes paid.
* This may lead to issues during tax audits or income tax scrutiny.

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### 3. Is it valid proof for payments Rs.10,000 and above?

* No, **for payments above Rs.10,000, proper documentary proof like a bill/invoice with supplier details is required**.
* Only mentioning item name and price is insufficient for audit and tax compliance.
* Payments above Rs.10,000 in cash are generally discouraged under Income Tax laws; payments should be made through banking channels and supported by proper documents.

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### 4. Role of Society Auditor and Members

* **Auditor’s Role:** The society auditor should definitely point out such irregularities in their audit report as it reflects poor accounting practices and potential non-compliance.
* **Members’ Role:** Members should ensure that the managing committee maintains proper bills/invoices and transparent accounts. They can insist on better record-keeping and may call for an explanation during AGM or committee meetings.

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### Summary & Recommendations:

* Society should **insist on proper bills/invoices with vendor details and GST if applicable**.
* Payments should preferably be made via cheque/online transfer for traceability.
* Maintain proper documentation to avoid legal and tax issues.
* Auditor must highlight these lapses.
* Members should monitor accounts actively to ensure good governance.

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If you want, I can help draft a checklist or format for proper bill documentation for your society. Would you like that?

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