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Advance to commission agent in cash above limit

Tax queries 584 views 2 replies

Facts of the case:

Comapny generally pays huge cash amount (in lakhs) to commission agent for the meeting payment liabilities to transporters. Agent also charges commission as per terms and transactions. Freight charges are also booked regularly, i.e. cash advance are given for revenue expenditure.

Should the cash payments be disallowed u/s 40A(3)

Replies (2)
freight charges paid for transportation of goods upto 35000 per person per day in cash is only allowable u/s 40A(3). if payment is made above this limit, the whole payment will be disallowed. payments also include advance payment in cash.

Yes if the amount paid in advance exceeds the limit of Rs. 35,000 then the whole of such expenditure can be disallowed. 

Since there is an agent appointed for the purpose of watching the logistics and transportation it is better always to pay him by cheque. He can inturn draw cash from the bank and use it for payment to transporters which may be lesser than the limit. 

For more information and doubts Contact me at https://capraveenmr.wordpress.com/ or mail me at mrpraveen @ live.com


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