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regarding sec 40 A(3)

balaji (CA,CS) (29 Points)

04 February 2009

can any one clarify me that whether it is the whole expenditure

or the payment made in cash with a simple example n are there any circulars

relating in this context

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arvind (article assistant) (82 Points)
Replied 04 February 2009

MR. CA Balaji

sec 40A(3) cover only Reveue Expenditure whether it is whole Expenditure or part of payment

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Originally posted by :balaji
"	can any one clarify me that whether it is the whole expenditure or the payment made in cash with a simple example n are there any circulars relating in this context	"

As per sec 40A(3) payment for expenditure made in cash or by bearer cheque in excess of 20000 then the amount paid by cash or by bearer cheque will be disallowed.(this is respect to only revenue expenditure)

For example:- total purchse is of Rs 525000.00 in which Rs.25000 has been paid in cash then 25000 will be disallowed

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CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 04 February 2009

In case of violation of provisions of Sec. 40A (3) i.e. payment of expenditure in excess of Rs.20000/- made by cash or otherwise than by A/c Payee cheque/draft, disallowance u/s.40A (3) will be 100% of such payment of expenditure by cash or otherwise than by A/c Payee cheque/draft instead of 20% from Asstt Year 2008-09 onwards.

Abhinav Agarwal (M.Com C.A SAP Consultant) (814 Points)
Replied 04 February 2009

In simple words, Any expenses you are claiming in P/L Account, that will not be allowed if these condition are not satesfied.

Thanks Ashok...I was bit confused about the % of disallowance. I could recall 100% but here it was mentioned 20%....

CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 04 February 2009

Provision of Sec 40A (3) does not apply in respect of an expenditure which is not to be claimed as deduction u/s.30 to 37. Upto Asstt Year 2007-08, 20% of payment made in excess of Rs.20000/- was disallowable. From Asstt Year 2008-09, entire payment i.e.100% is disallowable u/s.40A (3). Please note that, unless amount of bill and amount of payment exceed Rs.20000/-, Sec 40A (3) is not applicable.

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khurshid (Accountant) (26 Points)
Replied 08 April 2009

if salary wages paid per month rs. 15,000.00 in cash for the financial year 2008-2009 allowed sec 40A(3) or not allowed

20,000 expenses in cash yearly or monthly

khurshid (Accountant) (26 Points)
Replied 08 April 2009

PiyushAgrawal (Chartered acooutant in practice) (575 Points)
Replied 08 April 2009

Originally posted by :khurshd
"	if salary wages paid per month rs. 15,000.00 in cash for the financial year 2008-2009 allowed sec 40A(3) or not allowed 20,000 expenses in cash yearly or monthly	"

Hello khurshd
If u paid salary to two person 15000 each total 30000 per month,it is allow as per sec 40A(3)

khurshid (Accountant) (26 Points)
Replied 09 April 2009

Pls. confirm Sec 40a(3) single entry exceding 20,000.00 or Single Persion,company, firm payment made in year exceding Rs.20,000.00

X Purchase Rs, 1,20,000.00 to Y Raw Material in M/o April,2008 Payment Made in cash April-08 to March-09 in 19,000.00 each month sec 40a(3) allowed or not