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s 40a(3)

CA Shyam Sunder Agarwal (CA) (103 Points)

01 September 2011

Dear friens,

Your advise is required whether payment of wages to factory workers in cash above Rs 20,000/- will be disallowed u/s 40A(3) or it is allowable expendituer as per rule 6DD?

Reagrds,

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14 Replies

TRILOCHAN (SENIOR ACCOUNTANT) (698 Points)
Replied 01 September 2011

It is disallowed U/s40A(3), if payment made to sinle person on a single voucher.

Nitin Garg (CA FINAL Article Trainee B.com) (171 Points)
Replied 01 September 2011

Yes it is disallowed however, Where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs. 50,000, payment is allowed

2 Like

CA Kumar Mukesh (CA CMA FINAL and Advance Excel Trainer) (6871 Points)
Replied 01 September 2011

In that case if a sinle person takes wages in excess of Rs 20000, in single day, then will be not allowed but when it paid to group of person you shoul check wages & salry sheet

Nitin Garg (CA FINAL Article Trainee B.com) (171 Points)
Replied 01 September 2011

Mukesh is right.. this was amendment from 2009

Devendra (Chartered Accountant) (4775 Points)
Replied 01 September 2011

Payment of Wages to single worker above Rs. 20000/- shall attract section 40A(3). Hence it is advisable to pay the wages within the limit of Rs. 20000/-.

Regards,

Devendra K

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 01 September 2011

IT WILL BE DISALLOWED IF PAID TO ONE PERSON

manish sharma (ca final) (110 Points)
Replied 01 September 2011

if payment made a single person in same day above rs 20000/- it is disallowed

sandeepverma (don't make exuse for study) (304 Points)
Replied 01 September 2011

this is disallowed and one scheme also come in your all wages should be transfer by bank ont in cash " this rule recently applicable in haryana "

PRADEEP REDDY (CHARTERED ACCOUNTANT) (664 Points)
Replied 01 September 2011

In that case if a single person takes wages in excess of Rs. 20000, in single day, then will be not allowed.

but when it paid to group of persons and cash is given to a single person for the purpose of distribution you should check wages & salry sheet whether payment for each person in such a group exceeds rs.20000

swati (ca final student) (157 Points)
Replied 01 September 2011

this is nt covered in rule 6DD....

being payment made by way other than a/c payee cheque in excess of rs 20000 to a single person in a single day...hence disallowed u/s 40A(3)

srinivass (CA Final) (2466 Points)
Replied 02 September 2011

It is disallowed ...........

Chandra Sekhar P (G.M. Finance & Accounts) (116 Points)
Replied 02 September 2011

If the payment is to be made on the a day when bank is closed because of Holiday or Strike.

Since the nature of payment is "wage", provisions of sec.40A(3) applicable and disallowed if paid inexcess of Rs.20,000/- to a single worker . No. of vouchers immaterial.

We should see the nature of payment. If it is expenditure, and payment is in cash above Rs.20,000/- the same will be disallowed.