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gekco (B.Com)     19 May 2018

Cash purchase for b2b goods over rs 10000

Hello Sir,

Can anyone clarify the rules for B2B buyers on Purchase of Goods in cash of more than Rs 10000. Because, we buy goods from many wholesalers from different cities of India and they ask for 100% payment in cash before giving Goods.

I know there is 2 lakh limit for "Sellers" but what is the rule for buyers on cash purchases of 30-40K in single day from one wholesaler.  Are our purchase bills valid or not ?

Thank You



 9 Replies


Jatin (Accountant)     19 May 2018

You can't pay more than 10000 for purchase of goods per supplier otherwise 100% penalty

gekco (B.Com)     19 May 2018

Hello Sir, Then what is the option, if seller asks for 100% payment , Cheque processing takes 2-3 days . If we give cheque then what is the guarantee if supplier do not deliver goods after cheque is processed or create problems. How can we trust a seller in different city that we give him cheque and he will deliver goods after few days.


Jatin (Accountant)     19 May 2018

You can pay to seller through IMPS (immediate credit seller bank account) 24×7 days IMPS facility available up to Rs. 200000 per day
1 Like

RAJA P M ("Do the Right Thing...!!!")     19 May 2018

Yes... I agreed to Mr Jatin.

@ Gecko.,

Cash payments restricted less than 10k...
If Supplier ask immediate payment then You ll be pay IMPS or DD or NEFT...

No more restriction for electronic payment mode...
Only restriction on Cash Payment...
rama krishnan

rama krishnan   20 May 2018

but there's no penalty for cash purchase but 100% of expenses would be disallowed
1 Like
CA S Praveen Kumar Reddy

CA S Praveen Kumar Reddy (Chartered Accountant)     20 May 2018

GST there is no problem but in income tax there is 100% penalty and disallowances
rama krishnan

rama krishnan   20 May 2018

there's no penalty for cash purchases only disallowance

Jatin (Accountant)     20 May 2018

Agree with Rama Krishna Ji
1 Like
Rahul Patil

Rahul Patil (Article assistant)     26 April 2021

Suppose I have paid Rs. 130000/- in a day as cash purchase to supplier.

I have filed my ITR u/s 44AD disclosing my profit @ 10%.

How disallowed Rs. 130000/- be treated in my income?

Whetther it will be added to my profit or not?

whether my tax liability will increase or not?

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