LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Cash paymen in excess of rs.2000

navinkumar naicker (Article) (419 Points)

15 February 2013

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

Reply
Follow
Share

33 Replies

MD. RAFI (Manager Accounts (future CA)) (670 Points)
Replied 15 February 2013

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.

1 Like

Aman (Finance Professional) (604 Points)
Replied 15 February 2013

Md. Rafi is absolutely ryt....

2 Like

Manoj chopra (article) (128 Points)
Replied 15 February 2013

i too gree with md. rafi

2 Like

CA Suhas Prabhu (Chartered Accountant) (159 Points)
Replied 15 February 2013

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.

4 Like

venkatesh (learner) (116 Points)
Replied 15 February 2013

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.

1 Like