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payment exceed 20000

Ramesh (Account Executive) (54 Points)

10 March 2008

hi,

I had made a payment exceed 20000 in cash. I know payment exceed 20000 in cash is totally disallowed but what effect it will arise when i make a payment exceed 20000 tell me briefly.

Thanks

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10 Replies

Jitender Garg (Article(FINAL YR Pass Out)) (863 Points)
Replied 10 March 2008

20% of payment is disallowed (100% from AY 2008-09) if payment is made by other than A/c payee cheque or A/c payee Draft(by cash or berear cheque) & payment is made for expenses which are deductible under the provisions of Income Tax Act .

M.Sriram Shenoy (CA Final) (814 Points)
Replied 10 March 2008

When payments are made in excess of Rs.20,000.00, then such amount will be disallowed, which has the effect of increasing your profit.More profit, then more tax.This provision is made to decline people from booking bogus expenditure and to have proper transacting evidence for a particular payment being made to any person.

Manish (Advocate) (101 Points)
Replied 10 March 2008

Are the persons assessable u/ss 44 Ad / 44AE or 44AF also liable to be penalised for paying in cash for expenses >Rs.20,000/-. Pl also suggest HOW?

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 10 March 2008

jitendra is abs correct

CA. Gurdeep Singh Chawla (C A) (7080 Points)
Replied 10 March 2008

100% disallowed.

priyal (student) (46 Points)
Replied 10 March 2008

there is no need of so much discussion brother...... the payment u made is 100% disallowed so pay tax and be happy..

(Guest)

GOOS QUESTION RAISED BY MANISH. IT CAN NOT BE DISALLOWED , BECAUSE WHEN AN ASSESSEE FILE THE ITR UNDER THESE SECTIONS THEN HE DOEST NOT REQUIREE TO MAINTAIN BOOKS OF ACCOUNTS . THEN A.O CAN NOT ASK FOR THE BOOKS OF ACCOUNTS OR VOUCHER . THANKS