Negtive cash

hi swetha 2 adjust the negative cash balance u should  take the loan from the individual  on the date u have the negative  cash balance &  pls say thanks

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Sweta actually we cant take loan of or above Rs. 20000 as u will have to show them in tax audit report under section 269 SS and 269T. and further i will suggest not to take loan on the date of cash shortage as if the case comes in scrutiny then it looks obvious that loan has been taken to hide cash shortage. so take loan from fake persons till the amount of 19999 aroud a week before the cash shortage and repay the same  when the cash is there in the same financial year.

agreed with Saharsh

Main point of sec: 269SS & T is if the loan touches the limit of Rs. 20000 any time during the P.Y. then repayment as well as futher loan should be routed through bank a/c.

My query is : Interset is also to be paid by chq.?

dear sweta , rather showing as loan you can convert them in to the cah sales,because for that you have take very less trouble just make some cash sales invoices

Agreed with Gaurang

The descussion is sound interesting.

There is an other way to convert the negative cash into positive.

In case of Partnership Concern, you can introduce cash by whatever amount through partner's capital a/c. Neither provision of income tax should be attracted in such case.

Taking loan of above rs. 20000 will get attracted the provisions of section 269ss & 269T. Consequently, penalty u/s 271(1) (c) can be levied.

Thanks