Sec 40A(3)

disallowed..

right preksha

Section 40A(3) was introduced and also amended to control black money. If each invoice is considered seperate payment, then the importance of the section is lost.

Everyone will prepare seperate invoices which is less than 20000 and could receive payment in cash.

Rgds

Vaibhav Thakkar

RGD & CO.

right preksha

Section 40A(3) was introduced and also amended to control money laundering acts. If each invoice is considered seperate payment, then the importance of the section is lost.

Everyone will prepare multiple invoices each of which is less than 20000 and could receive payment in cash.

Rgds

Vaibhav Thakkar/Gautam Lalwani

RGD & CO.

Thanx Mr.Vaibhav thakkar & Gautam Lalwani.

The whole amount  is disallowed if the payment made to a single person on a day regardless of two or more bills.

The whole amount  is disallowed if the payment made to a single person on a day regardless of two or more bills.

Yes According to recent amendment if the payment is made 2 the fisherman for fish products

sec40A(3) is not applicable in other cases if the payment xceeds Rs 20k in a particular day otherwise den an a/c payee cheque will b disallowed

 IF payment is made up of two different expenses at the same time in cash and the aggregate of both expenses exceeding Rs.20000/- then section 40A(3) is not applicable.........

Sagar,

Even i m trying to say the same thing from a long time.

I agree with Fatema and all who made comment as not a disallowance.

This is one of the loop hole of  the Income Tax.

For those who comment as disallowance please refer your book.

So if payments are made to different persons and the total of all those payments exceed 20k, whether the expense is disallowed?

Well guys...If  the payment's gonna be allowed, den i guess everybody's gonna divert the cash payments (to a single party - the same day) into different heads of expenditure to restrict ieach exp.  below 20k. This doesn't mean that i'm insisting on disallowance of the same. Frankly, i'm also confused.

Sai,

The theory says that the payment is not disallowed but practically no assessing officer will allow it.So it is better to make payment on two different days.

Since the payment made to a single person in a single day,  whatever be the name of expenditure be called, is disallowed. What ever may be the explanation, it is not advisable to take the risk.

Dear Pankit

For applicability of Sec. 40A(3), payment in cash above Rs. 20000 if made to same person in a same day against an expenditure against single bill, then it is disallowed.

As this  expenditure is made in 2 bills though on the same day it is not disallowed.

Hareesh I request u to plz read ur PCC book once again carefully to avoid any such misinterpretation.