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Cash payment exceeding 20000-urgent

23 February 2013

If a co. has make cash payment Rs30000 for small repair and manitenance of a boundary in the office.....and payment is for like cement and other repairing materials whether violation of sec.40(a)

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12 Replies

Ankit Mehra (Service) (176 Points)
Replied 23 February 2013

yes it is..

CA Prashant Gupta (DGM (F & A)) (14068 Points)
Replied 23 February 2013

yes, full exp will be disallowed.

you can take two bills or make two vouchers for payment

Ankit Mehra (Service) (176 Points)
Replied 23 February 2013

you can take two bills or make two vouchers for payment but it should be of different dates..

CA Prashant Gupta (DGM (F & A)) (14068 Points)
Replied 23 February 2013

Dear Ankit

different dates of vouchers is not mandatory

it can be paid in same date, but vouchers must be more than one so that to prove that payment was not made one time.

Ganeshbabu K (Audit and Tax Advisory) (48559 Points)
Replied 23 February 2013

secttion 40 (a)(3)

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 vouchers should be of different dates

Ganeshbabu K (Audit and Tax Advisory) (48559 Points)
Replied 23 February 2013

Please find the attached ammedement for rule 6dd

ammended in 2008

Attached File : 831581 1139772 43 rule 6dd new.pdf downloaded: 135 times

(Guest)

it will be disallowed....

source: https://www.indiantaxupdates.com/2013/02/15/section-40a3-disallowance-of-cash-payment-exceeding-rs-20000/

purshotam vohra (CA IPCC) (138 Points)
Replied 23 February 2013

@ ca parul saxena

Under section 40A(3)

Any payment made which in aggregare to a person in a day in other than account payee cheque/acoc*nt payee draft exceeds rs 20,000 to be disallowed in whole

In case of assesse carrying on business of hiring,plying and leasing goods carriage then the presribed amt is rs 35000

Vikas Singh Chauhan (Practice) (37 Points)
Replied 24 February 2013

Ms. Parul Saxena

You may consider replies of Ganeshbabu and Purshotam Vohra for your. Hoping you would have got the answer to your query.

Still as per facts as mentioned in your query, payment has been made to contractor for repair work done. Company is required to deduct tax u/s 194C. Where if payee is an individual or HUF company required to deduct tax @ 1% otherwise @ 2% on whole amount.

Ganeshbabu K (Audit and Tax Advisory) (48559 Points)
Replied 24 February 2013

Provided total payments to that party exceeds 75000 in the financial year as the payment towards single bill was not exceed 30,000

Anjani Kumar (Manager) (128 Points)
Replied 24 February 2013

Agree with Ganesh Babu

As per 2008 amendment you need to take two separate vouchers in different dates

Vinod (Article assistant) (234 Points)
Replied 24 February 2013

This expense will be disallowed , will not be allowed in as deduction under business profession head because expenses more then 20000 rupees will not be allowed as deduction.