40a(3)

 Whether advance paid for any purchase/ expenses exceeding Rs. 20000 will violate Section 40A(3)?

Replies (12)

yes it will violate...but there are some exceptions to purchase 

refer the link....hope your query is solved

https://www.simpletaxindia.net/2009/12/payment-exceeding-20000-40a3-exceptions.H T M L

https://www.charteredclub.com/section-40a3/

yes it will violate the section... Advance purchase expenses whatever it is .....

Yes it is voilation if u make payment in cash
Yes.. Payment should not be in cash..
Agreed wid all above
Yes to same person same day for same activity. ...
whether payment to a single party in cash on same day, but i am in doubt
yes it will violate.
Can the transaction of advance payment be shown as a loan?
Yes it will violate the provision.
Yes, It will violate provisions u/s.40A(3). So amount paid as advance to party will be disallowed in the year in which you claim such expenses in profit and Loss account. It is not matter whether you paid amount for a single bill or for multiple bills and it is the matter whether aggregate amounts paid to a single person in a single day exceeds Rs.20,000. If you treat it as Unsecured Loan then there will be no problem to you but problem exists for receiver as it amounts to 269SS violation (Acceptance of Loan in cash in excess of Rs.20,000) which will leads to penalty equal to violation amount.
Payment made to Municipal Corp. exceeding Rs.20000/- is allowed or not ????

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