Whether reimbursement of expenses covered u/s 40a(3) of it act

NOT allowable . Any expense payment / payments to single party in cash of amount exceeding rs 20000 in a single day is not allowable . Does'nt matter even if you are reimbursing traveling expenses to employee. However there is a exception for payment to transporter.

Thnx Ankit ji,

But the employee has incurred travelling expenses on different dates through out the month (expenses on each travel is around Rs.4000) and submitted the total bill at the end of the month which grossly exceeds 20000.

does'nt matter on what day they have incurred expense . What is relevant is if you claimed payment in cash to one person on same day of amount exceeding 20000 it'll not be allowed . What you can do is divide the payment ( may be on basis of submitted bills) on different dates so that payment to one person on single day does not exceed 20000 otherwise you have to make payment through cheque / e-payment. ( are yaar payment cash main ek din kar do aur accounts main bills ke basis pe alag alag din dikha do kise pata chal raha hai - sorry if dont like this idea.)

Sorry but i would like to disagree with the above given comment. Reimbursements such as this are not liable for 40A (3) matter is a litigative one but reibursement of travelling exp is and can no where be disallowed by invoking section 40 A (3) .

Sorry but i would like to disagree with the above given comment. Reimbursements such as this are not liable for 40A (3) matter is a litigative one but reibursement of travelling exp is and can no where be disallowed by invoking section 40 A (3) .

to avoid hassle the "reimbursement"term shoudl be avoided, debit the expenses on exact dates of occurance and paid through the employee, ( subject to 194C where ever applicable) 

How can i book the expenses on exact date of occurance ? i have received the bills at the month end.

Further my question is whether it will be allowed or disallowed u/s 40A(3) of IT Act? 

Similarly if labour payments of several persons(around 4000 each for 8 labours i.e Rs. 32000) paid in cash to one of the employee to disburse the same between labours, will be disallowed??

Let's agree to diagree, the present situation can no where be covered by any case or circustances specified in rule 6DD where cash payment of more than 20000 is allowed . Explain me if it can . If it cannot, the section 40A(3) is very clearly stating " ANY EXPENDITURE " of more than rs 20000 will be disallowed. and reimbursement of traveling expenses is a expenditure for the company.

DEEPAK , in your case of labour expenditure will be allowed because you are not making payment to 1 party, you are making payment to 8 parties . Understand it this way , do you expect that chief financing officer releasing the money will go and make payment to labour .NO he will give that money to some employee and that employee will make that payment to labour . That does not mean the payment is made to employee.

moreover, Deepak,in labour case even if you have made payment to agent who had paid the labour ,the expenditure will not be disallowed because that situation will be covered by rule 6DD .

Totally agree with what Ankit said. payments covered under rule 6DD (which are exempted frm being disallowed u/s 40A(3) does not cober reimbursement of traveling expenses. Keeping in mind that it is expenditure for the company it will attract disallowance. (In the present case)

Agreed with Ankit

reimbursement is just a term used for handling the petty cash and its related expenses, otherwise the expenses are booked in the Expenses a/c only, ( remember there is no a/c head in books such as "reimbursement a/c) so if the payee books the expenses direct in respective heads, and in narration portion only the reference of payee hands are mentioned, then more than 50% hassle would get solved. 

in absence of common accounting sense, if i pay my employee to deposit Rs 1 Lac to bank, then its transaction between cash a/c and ban k a/c, employee has noting to do, but somebound would ask for sure,. that whether TDS is applicable on such payment or not .............

enjoying such queries :)