Cash paymen in excess of rs.2000

Originally posted by : navinkumar naicker
	hiiii CAclubindia, my query is a client has paid cash of rs.30000 but against three several Journal vouchers which are below 20000 rupees so does this transaction attracts disallowance under sec 40(a)3 Best regards navin

Disallowance under sec 40(a)3 attracts when cash payment for more than Rs. 20000/- is made in one voucher. In this case aggregate Rs. 30000/- is paid in different dates & in 3 vouchers that may be 10000/- each, will not attract this section.
Wait for the experts comments. Thanks.

Md. Rafi is absolutely ryt....

i too gree with md. rafi

Section 40A (3) reads as follows:

Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure."

So even if the journals amount are less than Rs. 20,000/- the aggregate of payments exceeds Rs. 20,000/- The same is to be dis allowed even if there are several journal vouchers.

1.Company has pay on cash Rs.10000 or more but below 20K  with seperate invoice, but invoice value is Rs.30000 your journal posting is three separate entry means it is wrong it will affect IT 1961,Sec40A (3)

2. When company made a cash payment is more than Rs.5000 and above should adhere the revenue stamp in cash payment vocuher.

3. Generally company keep the petty cash for to spend day to day expences like,courier,stationary,local transport,staff welfare expences etc.,  and good practice is to pay all payments through cheque mode only even if you paid Rs.100.

It Will be Disallowed.

Since Either payment or Expenditure in cash Should not Exceed 20000/-.

it does'nt dis allowed if payment made different date/ diff. party upto 20000

you did not mention all three on same date = 30000 = disallowed

different dates = allowed

Friends... I have a similar doubt...

For Example...

X Ltd. purchased from Dumb and Dumber Ltd. three items of consumables say A for Process 1,

B for Process 2 and C for Process 3.

Dumb and Dumber Ltd billed Each item separately say Bill 1001, 1002 and 1003... each amounting to Rs.10,000..

Now if X Ltd pays Rs. 30,000 on same day against those three bills.. Whether it will attract Sec 40 A(3)?

Yes, It Will Attract....

sec 40A(3) not attract when payment made Rs. 30000/- for 3 bills each below Rs. 20,000/-   

Two different opinion came on my doubt!!! 

Yes the section will attaract only if you pay cash more than rs 20000.00  in a single transaction to the same party for the day.

Jayam Ramesh K C

@ Navin & @  Jiju Oommen

In both the cases Sec-40A(3) shall not be attracted if the payment is made for different vouchers bearing different dates.

The main thrust of Sec-40A(3) is on Payment by way of cash.

Regards