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Vehicle transport tax and vehicle permit exp. paid in cash ?

Somnath Sharma (Practicing Chartered Accountant) (81 Points)

28 July 2014

Our Client is a Transport Operator Firm having heavy trucks for transportation of Cement, fly ash etc. It has Deposited a total sum of Rs 1365000/- for transport Tax @ 26250 each in cash for 52 trucks. for each truck a separate receipt has been obtained for Rs 26250. Whether it will be alowed as deduction or will be hit by provision of Sec. 40A(3) and will be disallowed (cash payment Limite Rs 20000)

What will be in case of Deposit of Fee for obtaining pollution card and for Vehicle Permit ?

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2 Replies

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 28 July 2014

Dear Somnath,

It shall not be disallowed being a cash payment made to the "Government".

Please refer the plain text of Section 40A(3) read with rule 6DD of Income Tax Rules :

" (b) where the payment is made to Government and, under the rules framed by it, such payment is required to be made in legal tender ; "

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 28 July 2014

in case of transporters, this limit of 20000 is increased to 35000 per day so you are will in limit if it is a case of payment for one truck. but if it was paid for all those trucks on same day then it will be disallowed.