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Cash sales limit

chandan pal (Assistant Accountant) (81 Points)

11 May 2016

What is the limit of Cash Sales and Purchase

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6 Replies

Harshad Kanekar (Taxation and Accounts Executive) (314 Points)
Replied 11 May 2016

There is no Limit for Cash Purchase or Sale. It depends on Availability of Cash or Bank balance one has.

I guess your question is not clear.

Praveen Tawania (Owner) (369 Points)
Replied 12 May 2016

please clear your answer again.

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 13 May 2016

Dear Chandan Pal ji

as per income tax Act 1961 cash expenditure above Rs. 20000 is dissallowed u/s 40(3). so if u made purchase above 20000 in single transaction same purchase is disallowed under income tax Act.

In case of sales transaction the seller has no disallowance consequences in case the sale invoice(cash memo) exceeds the limit of Rs. 20000 since no deduction will be taken by the seller of such sale and consequently no disallowance can be made.

If you purchase goods for cash exceeding Rs 20000 it will be disallowed and the addition will be made.

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Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 13 May 2016

As per Notification no. 3545E issued by Income tax issued on 30.12.15. if assessee made CASH PURCHASE OR SALR of Rs. more than 2 Lakhs they have to quote PAN of both parties on Invoice.

W.E.F. JANUARY 1, 2016 ONWARDS

TRANSACTION OF SALE/PURCHASE OF ANY GOODS/SERVICES EXCEEDING ₹ 2.00 LAC PER TRANSACTION AND BUYER HAS PAN