Cash payment above Rs. 20000

for bearer cheques above 20000 ( banks refuse to pay above 10000) the bank need signature cheque issuer on back of cheque, so it would be established that such cheque was not paid to anybody else but to account holder self only.

Originally posted by : U S Sharma
	for bearer cheques above 20000 ( banks refuse to pay above 10000) the bank need signature cheque issuer on back of cheque, so it would be established that such cheque was not paid to anybody else but to account holder self only.

agree...........

Regards

Gourav

if u are a CA passionate, this is for you...CA PASSION

section 40(A)(3) can not be applied to banks and financial institutions recognized by RBI as banking business units .  banks dont have any problem as far as IT Act is concerned.

section 40 (a) (3) disallowance of expenses is not applicable to payment made by bank authorised by RBI

cash more than 20000 paid is disallowed in case of transporter it is 35000

 for more information

1- Section 40A(3) a It provides that any expenditure incurred as a payment in sum of exceeding Rs.20000/- otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, shall not be allowed as a deduction. However if payment is being made for hiring or leasing, the limit is 35000.

2- Section 40A(3)(B) It also provides that the payment will be deemed as profits of the business if the expenditure incurred in the books but payment is made exceeding Rs. 20000 in cash, otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS.

3- Section 40A (3) It provides that the payment in a single day should not be exceeding Rs. 20000. It doesn’t mean the single payment shouldn’t 20000 but the aggregate amount should not exceed the limit. Some parties split high value payment into several cash payment for evasion of section 40A (3) a, so this rule is for evasion of payments.

4- There is also a rule that payment made to a person in a single day, otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, exceeds the limit; the payment will be deemed as profits of the company according to proposed sub-section (3) of section 40(A).

Yes, Bank could make the payment in excess of Rs.20000 in cash up to Rs.50000 to the holder of Cheque, Beyond that Rs.50000/- Payment could be made only to a self account of holder, it may be credited to his own account, more over, bank is need of PAN number and it may sometimes collect neccessary charges for the transaction.

Thanks Friends

Originally posted by : NIMIT MEHTA
	section 40(A)(3) can not be applied to banks and financial institutions recognized by RBI as banking business units .  banks dont have any problem as far as IT Act is concerned.

agree

Rs.20,000/- Limit is only for Expenditure. Cash payment made to the bearer of a cheque / payee across the counter by a banker will not take the form of Expenditure. Its just a repayment of Liability. Banker dont have any problem as far as this limit is concerned.

YES BANK WILL MAKE PAYMENT BECAUSE RS.20000 LIMIT IS ONLY FOR EXPENDITURE. BANK COULD NOT BE TREATED AS EXPENDITURE. THIS IS THE BANK LIABILITY TO PAY THE CONSUMER

Yes, Banker can made cash payment  of above 20,000/- to the bearer of a cheque / payee across the counter. 

Section 40A (3) is applicable for disallowance of expenses and is not applicable to payment made by bank to customers.

section 40(A)(3) IS CONCERND WITH ONLY EXPENDITURE & MOREOVER IT'S NOT APPLICABLE TO BANKS.FOR EXPENDITURE EXCEEDING RS.20,000.00 THE AMOUNT SHOULD BE PAID ONLY THROUGH CROSSED A/C PAYEE CHEQUE OR BANK DRAFT.HOW EVER THE SECTION 40 (A) (3) HAS FEW EXCEPTIONS.

FOR A  BEARER CHEQUE WITH AN AMOUNT EXCEEDING RS.20,000.00, A SIGNATURE HAS TO BE MADE ON BACK SIDE OF THE CHEQUE.

if we purchase material in urd bill of rs.54000/- or above . can we paid barrer cheque in name of party of rs.54000/- or above.?

The restrictions contained in section 40A (3) are applicable to payment for purchases as well. The term expenditure as per section 40A(3), means all outgoings including the expenditure incurred for purchasing the stock-in-trade (Attar Singh Gurmukh Singh vs Income Tax Officer,1991 AIR 2109, 1991 SCR (3) 405 ).

Hence the payment made otherwise than by account payee cheque / draft will be disallowed even if it is for purchases.

However Rule 6DD contains the cases and circumstances in which payment of a sum exceeding Rs. 20,000 may be made otherwise than by crossed cheque/ draft. Some of the cases mentioned in Rule 6DD which may be relevant for you are as under :-

e) where the payment is made for the purchase of—

  (i)  agricultural or forest produce; or

 (ii)  the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or

(iii)  fish or fish products; or

(iv)  the products of horticulture or apiculture,

to the cultivator, grower or producer of such articles, produce or products;

 (f) where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products;

Bearer cheque for payment of expenditure 20500