What does disallowance u/s 40 a(3) mean?

A business if makes a payment of above 10000 in cash in a day, that transaction is termed as disallowed.

Does this mean that the business won't be able to take deduction on such expenses and will have to eventually pay more tax or does it mean that payment above 10000 in cash is simply restricted and should not be done at all?

Replies (3)
Quick Summary
Section 40 a(3) of the Income Tax Act pertains to cash payments exceeding £10,000 in a single day. This disallowance means that such expenses will be added back to your business income, potentially increasing your tax liability. It's crucial for businesses, particularly limited companies filing under 'Profits and Gains from Business and Profession', to adhere to these rules and avoid making disallowed cash transactions.

Disallowance means any expenses over and above 10000 will be added back to income.
Please check reply again, may be wrong.
This is applicable for persons who has to file returns as per it act under the head profits and gains from business and Profession.Its a limited company.

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