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Anand Raghavendra (Manager-Internal Audit)     30 August 2012

40 a (3) of it act

Like to know the applicability of Sec 40A(3) of the incometax Act if Salay is paid Rs21000/-in cash?

 11 Replies

CA Saiyum khan

CA Saiyum khan (Practicing CA)     30 August 2012

20% of salary amount would be disallowed as per sec. 40A(3).

CA Ram

CA Ram (CA)     30 August 2012

100% salary will be disallowed  U/s 40A (3).................


Bharath (C.A,C.S)     30 August 2012

Section 40A(3) of the income tax act says that if the assessee makes any payment or receipt, expect from cross payee cheque or dd or any banking mode, exceeding Rs. 20000 to a single party is disallowed and treated as the personal expenditure or receipt of the assessee.

but disallowance will not operate if 


 salary is paid after deducting tax by an employer to an employee, no disallowance operates, after fulfilling such condition.
(a) Such employee is temporarily posted for a continuous period of 15 days or more in a place other than his normal place of duty or on a ship.
(b) He does not maintain any account in any bank at such place or ship.
all other cases fully disallowed.

praveen (Chartered Accountant)     30 August 2012

Originally posted by : CA Saiyum khan

20% of salary amount would be disallowed as per sec. 40A(3).




Now 100 % is disallowed.

1 Like

M.Muthukumar (Chartered Accountant)     30 August 2012

100% of the salary expense will be disallowed if the payment is made to a single person on a single day...

CA Kiran Sutrave

CA Kiran Sutrave (CA)     31 August 2012

100% of the Salary paid will be disallowed


CA GUPTA (..)     31 August 2012

100% salary disallowed


ALOK KUMAR JHA (STAFF)     01 September 2012

100% will be disallowed.

Vaibhav Jandey

Vaibhav Jandey (Life iz Hard; I'm Harder)     01 September 2012

The entire amount Rs 21000 is inadmissible in the first instance..

But in some exceptional cases as mentioned above by the user Bharath; it would be admissible.

Tony John

Tony John (Chartered Accountant)     01 September 2012

The payment will be fully disallowed as per IT Act.

Akshaydeep Tarachand Dhoot

Akshaydeep Tarachand Dhoot (Account and Audit Assistant)     01 September 2012

100% salary will be disallowed

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