SEC. 40A(3)

PLEASE I NEED A HELP ON THIS QUESTION.

 

A company is paid Rs. 65000/- to a contractor. But it showed that there are 4 bill, each less than Rs. 20000/-, of different dates. Will this payment is disallowed u/s 40A(3)?

Replies (2)

Hi Harsh,

As per section 40A(3), any expenditure paid in cash by more than 20,000/- rupees will disallowed 100%. But for disallowing the exp. the bill as well as payment in a day should exceed 20,000/- rupees. In your case, since the each bill is less than Rs. 20,000, nothing will be disallowed. 

yes, it will be allowed as an expense..... this might be true that company is making payment in mode other than cash i.e. in account payee cheque, account payee draft then also it is allowed......... and also amount of each bill is less than Rs. 20000/-..............

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