As per Rule 6DD no revenue expenditure should exceed Rs. 20,000/- in cash.

So salary can not be paid in cash above Rs. 20,000/-.

Revenue  payments exceeding 20000/- should not be paid in cash. Since salaries are revenue in nature should not be paid in cash

hi sagar,

i have already read ur question and answer there on.It is right that no revenue exp. in excess of Rs.20000/- which is paid in cash is allowed,but in "Salary and Wages act" there is a specific guideline that we can make payment  of salary in cash irrespective of the amount.

So Salary and wages is a allowable expenditure.

no ITD disallowed it

salary paid in cash exceeding rs. 20000 will be disallowed as per IT Act sec 40A(3),   read the relevant section carefully it is not to be seen as agregate for full yr its to be seen transaction wise.

As its an revenue in nature it should not be paid in cash as excess of RS 20000/-

 As per Sec 40 A(3) expenses more than Rs.20,000 on a day should be paid only throuhg account payee cheque. So salary payment in excess of Rs.20000 to one employee is disallowed. 

But if it is divided in and paid in two day it is allowed. But we need to prove that it paid in two installment.

Usually salary is paid once in a month and not twice. So dividing it is not great idea. AO may get doubt.

But if can prove that we paid twice then AO can't disallow.

Friends,

absolutely agreeing with the solns given by friends, I am also agreeing with u, but at this moment Rs.20000 becomes Rs.35000 so payment can be made.

Thanks

Debashis

Dear Sagar

For Cash payment Rs.20000/- is the per day limit to each party, If any urjent cases you want to pay above 20000/- you should book in two persons names. Other wise you are allowed to pay Rs.20000/- per day per party in cash mode.

Thank u every body for giving your valuable suggestions

in this question cash payment of salary made by employer. salary payment is a business expenses.

so, The cash payment of salary excced Rs.20000 ,it will be disallowd subject to IT rule of 6DD.

yes, not allowed

Originally posted by : hareesh gupta
	yes, not allowed

In my opinion It can be paid --- in IT rule 6DD it is clearly written --- (j)  where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Act.

If I wrong pls rectify me.

In my opinion It can be paid --- in IT rule 6DD it is clearly written --- (j)  where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Act. If I wrong pls rectify me.

Read more at: /forum/details.asp?mod_id=44682&offset=3#.U9eTmPmSzzN
 

what about electricity bill paid to UHBVN Ltd...exceeding rs. 20000 in cash............

whether UHBVN ltd. is considered as State Govt................

Some one tell me that UHBVN is an Autonomous Unit.....so disallowed........

1. Payment to Specified payee Rule 6DD(a)- Where the payment is made to 
   • (i) Reserve Bank of India  or any  banking company as defined in section 5(c) of Banking Regulation Act, 1949; 
   • (ii) State Bank of India or any subsidiary bank as defined in section 2 of SBI (Subsidiary Banks) Act, 1959; 
   • (iii) any co-operative bank or land mortgage bank; 
   • (iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949; 
   • (v) Life Insurance Corporation of India.
2. Payment to Government  Rule 6DD(b)- Where payment is made to the Governmentand, under  the rules framed by it, such payment is required to be made in legal tender.
3.  Payment by certain modesRule 6DD(c) - Where the payment is made by
   •  (i) any letter of credit arrangements through a bank; 
   • (ii) a mail or telegraphic transfer through a bank; 
   • (iii) a book adjustment from any account in a bank to any other account in that or any other bank; 
   • (iv) a bill of exchange made payable only to a bank; 
   • (v) the use of electronic clearing system through a bank account; 
   • (vi) a credit card; 
   • (vii) a debit card. 
   • Note: “Bank” means any bank, banking company or society referred to in #(i) to (iv) of rule 6DD(a) and includes any bank [not being a banking company as defined in section 5(c) of the Banking Regulation Act, 1949], whether incorporated or not, which is established outside India.
4. Adjustment in books Rule 6DD(d)-  Where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee.
5. Purchase of certain products Rule 6DD(e):Where the payment is made for the purchase of  -
   •  (i) agricultural or forest produce; or 
   • (ii) the produce of animal husbandry (including livestock, meat, hides and skins)***** or dairy or poultry farming; or 
   • (iii) fish or fish products; or 
   • (iv) the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products. 
6. Cottage industry Rule 6DD(f)- Where the payment is made for the purchase of the  products manufactured or processed without the aid of power in a cottage industry, to the producer of such products.
7. No bank service Rule 6DD(g)  - Where the payment is made in a village or town, which on the date of such payment is not served by any bank,to any person whoordinarily resides, or is carrying on any business, profession or vocation, in any such village or town.
   • Note: “Bank” means any bank, banking company or society referred to in #(i) to (iv) of rule 6DD(a) and includes any bank [not being a banking company as defined in section 5(c) of the Banking Regulation Act, 1949], whether incorporated or not, which is established outside India.
8. Terminal benefit to employee - Rule 6DD(h) Where any payment is made to an employee of the  assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs. 50,000.
9. Temporary posting of employee - Rule 6DD(i) Where the payment is made by an assessee by way of  salary to his employee after deducting the income-tax from salary as per section 192, and when such employee
   • (i) is temporarily posted for a continuous period of 15 days or more in a place other than his normal place of duty or on a ship; and 
   • (ii) does not maintain any account in any bank at such place or ship. 
10. Bank closed - Rule 6DD(j) Where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike.
11. Payment to agent  Rule 6DD(k)- Where the payment is made by any person to his agent  who is required to make payment in cash for goods or services on behalf of such person. 
12. Foreign currency Rule 6DD(l)- Where the payment is made by an authorised dealer or  a money changer against purchase of foreign currency or travelers cheques in the normal course of his business. Note: “Authorised dealer” or “money changer” means a person authorised as an authorised dealer or a money changer to deal in foreign currency or foreign exchange under any law for the time being in force