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Arrear Payment in Cash

Tax queries 695 views 2 replies

Sandip Kumar Sen

Sr.Manager(F&A)

114 Points Joined July 2008

My company a Govt.Company Planed to pay 50% of the Arrear Pay (Due to pay revision w.e.f 01.04.2007) to his existing employees in the Month of June 2009. The payment per employee is Rs.20000/- plus for each. Whether this cash payment will attrack 40A for no deduction of the entire expenditure of the Company.

Please help this is urgent.

Replies (2)

PiyushAgrawal

Chartered acooutant in practice

575 Points Joined September 2008

It attracts Sec 40A(3), so u should pay by a/c payee cheues..

Ashish Modi

CA FINAL STUDENT

80 Points Joined May 2009

Yes, it attracts the provisions of sec.40 A(3). The whole payment, if made will be Disallowed. The payment should be made by Account payee cheque or Account Payee Demand Draft.