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Cash expenditure allowed u/s 40(A) 3

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Prashant Sharma

84 Points Posted on 21 October 2020

whether monthly salary of Rs 20000/- in respect of a single employee can be made in cash as 10000/- paid on 01st day of the month and balance 10000/- paid on 15th of the month. Since the payment to a person in a day doesn't exceed amount prescribed as per 40(3) (A) will be eligible for deduction under PGBP?

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Quick Summary

This discussion explores the deductibility of cash salary payments under Section 40(A)(3) of the Income Tax Act. Specifically, it questions whether paying an employee £20,000 monthly in two £10,000 cash instalments (on the 1st and 15th) qualifies for deduction under Profits and Gains from Business or Profession (PGBP). The consensus is that since the daily cash payment does not exceed the prescribed limit, it should be eligible for deduction.