cash payment on purchase above 49000/-

This query is : Resolved

sachin Patni (Querist)
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10 June 2008 Dear Ones,

we are infrastructer Co. and Purcahse Material at the Site for which we have to make payment in cash which are always above 49000/-.

Now tell me that should we payment in cash for the cash bill above 49000/- if No then what are the ADJUSTMENT ENTRIES for the transactions. and what are the solutions if paid in cash in past year.

Thaks

Shyam Lal Naik

Shyam Lal Naik (Expert)
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10 June 2008 Expenditure involving cash payment in excess of Rs. 20000/- are liable to be disallowed. For FY 08-09(perhaps wef 01.06.08) cash payment in excess of Rs. 20000, whether comprised in one or more than one payment to a single party on a single day will also be disallowed.

Payment in excess of Rs. 20000 is relevant. Rs. 49000 is of no relavance.

The only way out is to pay in A/c payee cheque. If not possible, make payments on different dates, so that the payment does not exceed Rs. 20000 per payee per day.

nilesh gupta

nilesh gupta (Expert)
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10 June 2008 dear sachin
i am agree with mr. Shyam's opinion

in the case of infra co or contractors the problem is generally arise .

you shoud accounted for the payment less than 20000 in a single day, u can made brakup the payment in less than 20000 for each day, & or if supplier is unregistered one than create dummy supplier & made internal voucher for payment.

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sachin Patni

sachin Patni (Querist)
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14 June 2008 My problem is still there that what about for the F.Y. 2007-08 For the purchase above 20,000/-.

Actually reply my as per following cirucumstances:-

Purchased material out of Local Area where we don't have any relation with the delaer b'coz of this we have to made cash purchase of material for above 20000/-.

Tell me what about SECTION 40 A [3] OF THE INCOME TAX ACT-1961 RULE 6DD (J)