Cash payment of more than Rs. 20000 for electricity charges

Cash payment made more than Rs.20000 for one bill is disallowed.

Originally posted by : D н ! я σ ĵ
	Ofcoarse it is disallowed... Why it will be allowed???   I mean, what makes u think that it will be allowed....???   If u wud have been some proprietor or CPT student, i wud not have wondered ur Q.. But you are A FINAL STUDENT... u sure u r in finals or wat???

 Hey Dhiraj, its not a matter of being a CPT / Final student but its more important for me to have all tha valuable comments & opinion over this topics. Once again thanks a lot for your valuable criticism.

Originally posted by : Jagdish Bhalia
	Paymnet of Electricty bill in cash in excess of Rs. 20000/- is technically covered by the provision of Sec. 40A(3) and would prima-facie attract a dis-allowance. However though the existence of the section has been constitutionally held to be valid by the Hon. Supreme Court in the case of Attar Sing Gurmukh Singh Vs. ITO 191 ITR 667, the same was considered along with the Rule 6DD as it existed then which duly provided for the genuine hardship that may be caused to the tax payers. The intention of the provision was to curb the use of black money, reduce tax evasion and inculcate the banking habits. However it was never intended right from the inception of this section, read with the rule and circulars issued explaining the reason for such provision, to restrict the trading activities of the assessee or the tax payer.

 Hello sir, thanks a lot for solving the query. i dont think so that i can get any better answer other than yours

Originally posted by : Rashid VA
	Hi All The payment made to electricity board which is more than Rs:20000 in cash can not be disallowded because it is an exemption to sec 40a(3) under Rule 6DD. Remaining payment will be disallowded

 Hi Rashid, exemption under rule 6DD clearly mentions that any payment made to government which is in the form of legal fee or obligation but electricity charges is neither a legal obligation or legal fee. & moreover nowadays there are many private sector companies involved in electricity distribution business.

Electricity boards are getting privatised these days which means if any payment is made to them will be made to private comany and not to Govt. So electricity expenses will be covered u/s 40A(3) and will be disallowed.

But if payment is made to a Govt. Board then there is no need to deduct TDS.

Hi Rashid, exemption under rule 6DD clearly mentions that any payment made to government which is in the form of legal fee or obligation but electricity charges is neither a legal obligation or legal fee. & moreover nowadays there are many private sector companies involved in electricity distribution business.

Hi Mahesh, I hope you got clarity abou your doubt

To my knowledge no private companies are authorised to sell the electricity to public. Ofcourse there are companies producing electicity but all they can do is sell those electricity what they have produced to Govt.

Govt. is distributing the electricity among public obivously it can be condidered along with the rule 6DD.

If any sugesion and correction please let me know...

DEAR ALL,

                       I THINK RULE 6DD IS NOT APPLICABLE TO ELECTRICITY EXP  AND HENCE WILL BE DISALLOWED IF MADE IN CASH >20,000 WITHOUT CHEQUE/BANK AND ALL ETC,

BECAUSE under rule 6dd the word GOVT is used and not the govt company,

and the payment of electricity is made to govt company    (pvvnl)/uppcl

this is my personal opinion , plz clarify with suitable case law if any