Cash transactions

You have to maintain proper Cash Purchase Vouchers and keep the following Cash Transaction limits in mind and their consequences :

1). CASH PAYMENTS :

As per the Provision of Section 40A(3) of the Income Tax Act 1961, A person can pay a maximum of Rs. 10,000 per day to per person in "CASH". If the Cash payment exceeds Rs. 10,000 in a day, then you will not be allowed to claim deduction of that particular expenditure in your P&L A/c [ PROFITS AND GAINS FROM BUSINESS OR PROFESSION HEAD ]. There is no Year limit. The limit prescribed under the Law is "per day."

2). CASH RECEIPTS :

As per the Provision of Section 269ST of the Income Tax Act 1961, No person shall receive an amount of "Two lakh rupees" or more :

(a). in aggregate from a person in a day; or

(b). in respect of a single transaction; or

(c). in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account.

Happy Diwali...🙏🙏🙏
Regards,
Shivam RC.

Better to avoid cash transactions

My purchases are from local market so it is in cash only. Can i opt for sec 44AD and and maintain proper purchase records ?

as per 44AD all allowable deductions are deemed to be allowed when we calculate profits @ 8% or 6% as the case may be. 

But maintain all the purchase bills to prove genuineness of business. you can do cash purchases but take care of  limits of section 40A3