Wage payment in cash above rs 20000/- disallow u/s 40a(3)

Tax queries 3750 views 14 replies

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,

Replies (14)

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

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


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

Mukesh is right.. this was amendment from 2009

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

IT WILL BE DISALLOWED IF PAID  TO ONE PERSON 

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

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 "

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

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)

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

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.

 

Payment in same day to same person exceding of Rs20000,is disallowed u/s 40A(3)..

There is no exception of above payment in Rule 6DD..

What about Cash payment above Rs. 20,000 to any classes on a single day?

Supposedly they give a huge discount if we pay the amount at once. Will it be disallowed?


CCI Pro

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