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Cash Sales

RAJ KUMAR (FINANCE MANAGER) (1393 Points)

16 May 2011

HELLO FRIENDS, CAN ANY BODY TELL ME MY CLIENT HAS SOLD THE GOODS ON CASH FOR2,40,000

PARTY DOES NOT WANT THE BILL.

MY CLIENT HAS SIMPLY CUT THE CASH RETAIL SALE BILL FOR2,40,000 AND DEPOSIT THAT CASH IN THE BANK.

WHETHER THIS TREATMENT IS CORRECT.

WHETHER ONE CASH SALE BILL OF2,40,000 WE CAN MAKE.

PLS. HELP

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10 Replies

CS Bijoy (Expert) (6394 Points)
Replied 16 May 2011

Unless the product is exempted from the tax it is not possible. Two situation can be happned in this matter that- i) The amount will be treated as inclusion of tax and the tax will be paid by the saler by their own and ii) Bill is cancalled and new Bill by showing tax is raised.

(Guest)

Simply cutting the Sale bill will not serve the purpose.

Since, you have already deposited Cash in bank, you have to book the sales in your accounts.

I dont think there should be any problem in preparing cash bill worth rs. 240000/-.

Under Section 40A(3) you can not make the payment over & above Rs. 20000/- in a day for one bill.

Here You have received the Cash, & also you are booking the sales so I dont think there should be any problem.

Expert Opinion is also invited.

(Guest)

As per Mvat Act, for VAT audit you will have to provide TIN wise sales details in form 704.

In future if you dont want to show the bill in books better avoid depositing cash in the Bank.

Now, as Bijoy said you can treat this bill as incusive of tax.

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 16 May 2011

there is no limitation for cash sales

you can made cash sale bill of rupees 240000

kshitij kumar (CA Final) (41 Points)
Replied 16 May 2011

My dear frd there is no problem in cash sale of Rs.240000 or other amt. whatever can. It's a valid sale. and i will also say that sec 40A(3) does not apply in case of sale or purchase of goods.

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 16 May 2011

The intention of Mr. Raj Kumar is from the income tax point of view. So, VAT wont come into picture still lets discuss it in both aspects - Income Tax as well as VAT.

1. Income Tax -- There is no problem in preparing the bill as there is no restriction on cash receipts. Even there is no need to prepare any bill. You may show it as cash sales in the books of account.

2. VAT -- Giving the TIN number of the seller is not mandatory. It is required because the department wants to cross verify the set-off claimed the dealers. In this case, the person is not asking for bill. It means he is not accounting for the said transaction. So, the question does not arise of him claiming the set-off.

Considering the above points, there is no harm. Just pass the sales entries in the books.

KIYOSH (TAX CONSULTANT) (332 Points)
Replied 16 May 2011

agree with amol

XYZ..... (-) (516 Points)
Replied 16 May 2011

Section 40A(3) is for payment in excess of Rs. 20000 and it has no role in sales. I think the person making payment , that is , purchaser will be having problem..His payment will be disallowed by the authority........plz correct me if I m wrong.