Sec-40A(3) whether applicable in case of reimbursements?

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Karnik Gulati

Consultant

34 Points Posted on 18 July 2009

Hi All,

Could you please tell me whether the reimbursements to an employee by his employer in excess of Rs.20,000/- paid other than by an account payee cheque is covered under the purview of the aforesaid section?

Please reply at earliest & it would be really great if you could give any decided case law in support or any commentary for that matter.

Thanks & Regards

Karnik Gulati

Replies (2)

Sorabh Gupta

Manager ( Taxation )

700 Points Posted on 18 July 2009

Karnik

As per my opinion "REIMBURSEMENT" is also the expenses for the company and section 40A(3) is applicable for any payment "EXPENDITURE" and i think expenditure words itself says everythng.................

So payment for reimbursement should be done accordingly.............section40A(3)

ashwani

ca final student

30 Points Posted on 18 July 2009

hello,

employer can make payment to employee exceeding Rs20000/-other than A/c payee cheque/bankDD in following conditions-:

(i) On account of terminal benefit not exceeding Rs 50000/-

(ii)Where payment is made in to employee who is temporerily posted to any place other than normal [place of duty for more than 15 days & does not maintain his bank A/c in that place

(iii) Where pmt is made to employee (in capacity of agent) who is required to make pmt in cash for goods & services on behalf of employer.

(iv) where pmt is made on day on which banks were closed on A/c of holiday or strike