40A(3)

Dear Riya,

Sec 40(A)3 is applicable to any expenditure in respect of which payment  in excess of Rs 20,000 is made otherwise than by an account payee cheque or account payee draft...Hence it is also applicable to salaries.The salary paid by the employer in cash in excess of Rs 20,000 will disallowed.

Regards,

Fatema

Dear Riya,

   The section applies to salaries also, coz its a business expenditure. However, there is an exception in Rule 6DD, which reads as follows,

 where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Income-tax Act, 1961, and when such employee—

  (A)   is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship; and

(B)   does not maintain any account in any bank at such place or ship;

Originally posted by : CA.G.Muguntha Narayanan
	Dear Riya, The section applies to salaries also, coz its a business expenditure. However, there is an exception in Rule 6DD, which reads as follows, where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Income-tax Act, 1961, and when such employee— (A) is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship; and (B) does not maintain any account in any bank at such place or ship;

I Agree

Dear Riya

I too agree with Muguntha Narayanan

S.V

salary  paid by an employer to an employee above rs.20000 in cash is disallowed

eg: an employer pays rs. 35000 to one of employee than it is disallowed but if he pays rs. 15000 to his 3 employees each than rs. 45000 (15000*3) is not disallowed

agree with comments

Yes Riya.. Section 40A(3) is applicable to salaries.

Section 40A(3) is related to business expenditure. Any amount of salary paid by employer to his employee is business expenditure. Therefore, If Salary paid in Cash is in excess of Rs.20,000 is not allowed as deduction.

Best answer by Mohit ...

yes its applicable to all items of p nd l a/c .....so its applicable on salaries.......

Is this section also applicable to capital Exp. ???

If i have purchased Vechicle in cash payment is dep. on it allowed or not as per 40A(3)????

Sec 40A(3) is clearly specifies that any expenditure in excess of Rs. 20,000/-, so the salary is and expenditure for an employer so the section also applicable to salary

Originally posted by : sid
	Is this section also applicable to capital Exp. ??? If i have purchased Vechicle in cash payment is dep. on it allowed or not as per 40A(3)????

no its not applicable for capital  exp......dep can be claimed even if cash payment for vehicle is more than 20000......

yeah,it applies for salaries also..the salary given by the employer should not exceed RS20000/- in cash or otherwise than by A/c payee cheque or draft to an employee..or else it will b disallowed to the employer