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Cash payment and bank transaction

Rakesh (Others) (147 Points)

17 November 2014

Respected experts

I am a tax payer . I run a coaching . But i dont deposit my money in my bank account .

Now my question is ...

1) Is it really necessary to deposit or keep money in bank , if i am a tax payer ?

2) I purchased 20 chairs in cash . I payed 40000 cash . since i dont use my bank account to make an transaction , will it make any issue ?

Somebody told me , i want to pay someone above 20000 , i should use bank account . is it really necessary ?

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7 Replies

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 17 November 2014

na there is no need to deposit cash in bank if u r not interested

but now if u wil pay more than 20000 for single expense to single party , youcant claim that expenses while finalising ur income...

but its advised why to maintain high cash in hand. have a bank account dear

1 Like

Hareesh Kumar (CA Final) (65 Points)
Replied 17 November 2014

if u still dont want to maintain bank A/c fine, then account the payments in three or four installments i mean to say account the payments have been made three different days

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Rakesh (Others) (147 Points)
Replied 17 November 2014

ok sir . thank you very much .

Sir , if i pay in cash to some one and i buy some goods from that person to sell that goods to make an profit and for that i pay 2 lacs in cash , will be allowed ?

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 18 November 2014

nopes it wil not b allowed dear.... u cant have purchases in cash.. so i wil suggest either have ten bills of below 20000 or pay in cheques

1 Like

Mihir (Wealth Manager) (5293 Points)
Replied 18 November 2014

You are carrying on a business and filing ITR-4. You will be required to maintain books of accounts. And running coaching classes is not cash intensive business. So use bank also for making large payments.