payment of more than 20000 in cash

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In course of business during 2005-06, we received raw materials from outstations for which we were paying about Rs.15000 per truck to the transporter through the driver in cash . Sometime we received more than 1 truck load with separate transport documents but the same transport company, thus the amount exceeded the maximum limit of 20000 in cash. What is the income tax provision.

Replies (8)

I think the way out could be like - u can show that the payment was made on different days i.e. 15000/- on one day & 15000/- on second day - i mean u can pass entry in such a way - & just check out if your case false into any of exemption in rule 6DD of the Income Tax Act 1961

 

sunil

Up to FY.07-08 there is no disallowance even if payments in cash in different times on the same day in agregate exceeded 20000/- provided each such payment is below 20000/- on any expense. From fy.09-10 payment to ANY PERSON in A DAY if exceeds 20000/- in cash that will be disallowed. U can plan ur accounting accordingly.

But  if payment  pertaining to previous years is made in this year then amended provisions shall apply . the best way out could be to check cash balance and if it exist , cash enteries could be change to avoid legal penalty.

Tom has explain nicely and correct provision of Income tax. For other don't advice your client about fabrication of accounts by changing entries. You should guide your client the correct provision and not advising the them to change the entries in books.

yes tom has explain nicely but der are certain exemptions-

If payment has made to govt, or its made for agriculture purpose where der is no bank or done on bank holiday it is allow

  Sir

               In the case of payment made for plying, hiring or leasing goods carriages, the provisions of 40 A 3 shall have effect as if for the words 20,000 rupees, the words 35,000/- had been substituted (w.e.f. 01 10 2009).

Hareesh is excactly right.

If a vehicle finance company gives a cash payment above Rs.20,000/- in a day, will it be disallowed? These payments are a sort of advances for the finance company and not a business expenditure.

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