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 ?
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 ; "
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