How much amount cash mode money pay

142 views 1 replies
one of the it assessee rent advance amount rs:10 lacs show in books as on dt:31-03-21.
question:
1.assessess how much amount cash mode repayment accepted in it act.
2.rs:1 lacs per day different dates accepted in it act.
Replies (1)

Under the Income Tax Act in India, there are specific rules governing cash transactions to encourage digital payments and track financial activity. Based on your queries regarding cash repayments and limits, here is the breakdown:

1. Limits for Business Expenditure (Section 40A(3))

If you are an assessee (business or professional) claiming an expense as a tax deduction, you must adhere to the following:

  • The Limit: Any payment or aggregate of payments made to a single person in a single day, if made in cash, must not exceed ₹10,000.

  • The Consequence: If you make a cash payment (or aggregate of payments) exceeding ₹10,000 to a single person in one day, that entire amount is disallowed as a business expense. This means it cannot be deducted from your taxable income, effectively increasing your tax liability.

  • Exception for Transporters: If the payment is made for hiring, leasing, or plying goods carriages (transport services), the limit is higher at ₹35,000 per day.

2. Regarding Your Specific Questions

  • Repayment of Rent Advance: Since this is a payment of an expenditure (rent advance), the rule under Section 40A(3) applies. To claim it as a legitimate business expense, you should use an account payee cheque, bank draft, or electronic clearing system (like NEFT, RTGS, IMPS, or UPI). If you pay more than ₹10,000 in cash to a person in a day, that payment will be disallowed as an expense.

  • Splitting Payments: You asked if paying ₹1 lakh in "₹1 lakh per day on different dates" is accepted.

    • The law specifies the limit applies to the aggregate of payments made to a person in a day.

    • If you make payments on different days, they are generally considered separately. However, if the payments are part of a single transaction or relate to a single event/occasion, you must also be mindful of Section 269ST.

3. Important Restriction on Receiving Cash (Section 269ST)

Separately, Section 269ST prohibits any person from receiving an amount of ₹2 lakh or more in cash:

  • In aggregate from a person in a day; or

  • In respect of a single transaction; or

  • In respect of transactions relating to one event or occasion.

Summary:

  • For claiming business expenses: Avoid cash payments exceeding ₹10,000 (or ₹35,000 for transport) per person per day.

  • For receiving cash: Do not accept ₹2 lakh or more in cash from a single person in a day, for a single transaction, or for a single event, as it carries a penalty equal to 100% of the amount received.


 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
06 July 2026
Chartered Accountant (Indirect Taxation)

Gowra Ventures Pvt Ltd

Hyderabad

CA

View Details
Company
25 June 2026
Accounts & Taxation Executive

Dindukurthy & Associates

Hyderabad

MBA

View Details
Company
25 June 2026
AUDIT MANAGER

JDAS & ASSOCIATES

New Delhi

CA

View Details
Company
05 July 2026
Financial Controller

NovumLake Partners

Mumbai

CA

View Details
Company
Featured 24 June 2026
HEAD - AUDIT AND TAXATION

A R JADHAV AND ASSOCIATES

Mumbai

CA Inter

View Details
Company
22 June 2026
Accountant

Global Image Technologies Private Limited

New Delhi

MBA

View Details
Company
ARTICLESHIP 27 June 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
29 June 2026
ACCOUNTANT

SANDEEP AASHISH & CO

Araria

B.Com

View Details