Cash payments in excess of rs.20,000/-

Tax queries 1094 views 3 replies

RAGHAVA

LEARNER

36 Points Joined February 2011

hai good morning to every one..... i have a doubt in the following instance.

My client is a trust, maintainin group of institutions. there they are paying salaries to the employees monthly after deducting tds perfectly. But in that group of educational institutions,for one institution employees they are paying salaries in cash after deducting tds. they are arguing that we are promptly deducting tds and no disallowance would raise on the base of Rs. 20,000/- above salary cash payment.

Pls clarify me whether the above arguement is correct ? Is it incompliance with the rule 6DD ? is there any exception to the trusts ?

Thanking you

Replies (3)

Sakthi Baskaran

Chartered Accountant

141 Points Joined August 2014

According to rule 6 dd of the income tax act, 1961the following payment will not be disallowed " 39[(j) where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Act, and when such employee (A) is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship; and (B) does not maintain any account in any bank at such place or ship;" If your client satisfy the above mentioned condition then the payment need not be disallowed. Otherwise such cash payment is disallowed u/s 40A(3). There is no exemption to trusts in this regard.therefore Sec 40A(3) applies to trusts also.