CASH PURCHASE OF GOODS OF INVOICE VALUE IS 150000 CAN I PAY CASH TO RESPECTIVE VENDOR IN A SINGLE DAY OF 150000
HE IS REGISTERED DEALER BUT NOT OPPEND CURRENT ACCOUNT
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Regarding cash purchase
Replies (4)
Please refer 40(a)(3)
No you cant pay more than Rs.10000 per day per invoice per person
Section 40A(3)(a) of the Income Tax Act provides that any expenditure incurred in respect of which payment is made exceeding Rs. 10,000/- in a single day otherwise than by an account payee cheque or through use of electronic clearing system, shall not be allowed.
1. According to sec 40A(3), deduction will not be available if the payment made to a person in a day in cash exceeds Rs .10,000. However, the above amount of Rs. 10,000 will be substituted by Rs. 35,000 in case of payments made to plying, hiring or leasing of goods carriage.
2. Un your case, if you have made a payment of Rs.1,50,000 to one vendor in a single day through cash, then the same will be disallowed u/s 40A(3) at the time of computation of your Income-tax liability.
3. So, it is better to avoid such a payment.
Please correct me if the above solution has an alternative view.
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