Cash voucher
This query is : Resolved
14 July 2010
Friends i would like to know that now as per amended provisions of TDS is it possible to do cash voucher upto Rs.30000/- each per day.Specifically in case of contractor.
14 July 2010
As per new provision , only cash payment made to transporter may be upto 30000/- per day.
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14 July 2010
Enhancement of limit for disallowance of expenditure made in the case of transporters Under the existing provisions of the Income-tax Act, where an assessee incurs any expenditure, in respect of which payment in excess of Rs 20,000 is made otherwise than by an account payee cheque or account payee bank draft, such expenditure is not allowed as a deduction. Given the special circumstances of transport operators for incurring expenditure on long haul journeys, it is proposed to raise the limit of payment to such transport operators otherwise than by an account payee cheque or account payee bank draft to Rs 35,000/- from the existing limit of Rs 20,000/-. For this purpose a new proviso is proposed to be inserted after the proviso in sub-section (3A) of section 40A of the Income-tax Act. The existing limit for other categories of payments will remain at Rs 20,000/- subject to the exceptions declared in Rule 6DD of the Income-tax Rules. The proposed amendment will apply to transactions effected on or after the 1st October, 2009. [Clause 16]
Limit is 35000/- not 20000/0
Enhancement of limit for disallowance of expenditure made in the case of transporters Under the existing provisions of the Income-tax Act, where an assessee incurs any expenditure, in respect of which payment in excess of Rs 20,000 is made otherwise than by an account payee cheque or account payee bank draft, such expenditure is not allowed as a deduction. Given the special circumstances of transport operators for incurring expenditure on long haul journeys, it is proposed to raise the limit of payment to such transport operators otherwise than by an account payee cheque or account payee bank draft to Rs 35,000/- from the existing limit of Rs 20,000/-. For this purpose a new proviso is proposed to be inserted after the proviso in sub-section (3A) of section 40A of the Income-tax Act. The existing limit for other categories of payments will remain at Rs 20,000/- subject to the exceptions declared in Rule 6DD of the Income-tax Rules. The proposed amendment will apply to transactions effected on or after the 1st October, 2009. [Clause 16]
Limit is 35000/- not 20000/0
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18 July 2024
As per the provisions of the Income Tax Act and the latest amendments related to TDS (Tax Deducted at Source), there are specific rules regarding cash payments made to contractors. Here’s a summary based on the current regulations:
### TDS on Payments to Contractors
1. **Section 194C:** This section deals with TDS on payments made to contractors and subcontractors. As per the provisions:
- If the contractor/subcontractor is an individual or a Hindu Undivided Family (HUF), TDS is required to be deducted if the total payment during the financial year exceeds Rs. 30,000.
- If the contractor/subcontractor is other than an individual or HUF (i.e., a company, firm, etc.), TDS is required if the total payment exceeds Rs. 1,00,000 during the financial year.
2. **Amendment and Cash Payment Limit:**
- Effective from April 1, 2019, Section 194N was introduced to restrict cash withdrawals from banks, cooperative banks, and post offices. It mandates TDS at the rate of 2% on cash withdrawals exceeding Rs. 1 crore in aggregate during the financial year.
- For payments to contractors, the limit of Rs. 30,000 pertains to the requirement of TDS under Section 194C, which is specific to the nature of payments (contractual payments).
3. **Cash Voucher Limit:**
- There is no specific provision under TDS rules that allows for cash vouchers up to Rs. 30,000 per day to contractors without TDS deduction. The Rs. 30,000 limit generally applies to cash payments where TDS is required to be deducted under Section 194C.
- Payments to contractors exceeding Rs. 30,000 in aggregate during the financial year require TDS deduction at the applicable rates.
### Best Practices and Compliance:
- **Non-Cash Payments:** It’s advisable to make payments through non-cash modes such as cheque, bank transfer, or digital payments to avoid TDS implications and to ensure compliance with tax laws.
- **Record-Keeping:** Maintain proper documentation and records of payments made to contractors, including invoices and agreements, to substantiate expenses and TDS deductions.
- **Consultation:** For specific cases or if there are doubts regarding compliance with TDS provisions, it’s recommended to consult with a qualified tax professional or chartered accountant.
In conclusion, while there are limitations and requirements under TDS provisions, particularly for cash payments to contractors, adherence to non-cash payment methods and compliance with TDS rules are essential to avoid penalties and ensure smooth tax operations.
### TDS on Payments to Contractors
1. **Section 194C:** This section deals with TDS on payments made to contractors and subcontractors. As per the provisions:
- If the contractor/subcontractor is an individual or a Hindu Undivided Family (HUF), TDS is required to be deducted if the total payment during the financial year exceeds Rs. 30,000.
- If the contractor/subcontractor is other than an individual or HUF (i.e., a company, firm, etc.), TDS is required if the total payment exceeds Rs. 1,00,000 during the financial year.
2. **Amendment and Cash Payment Limit:**
- Effective from April 1, 2019, Section 194N was introduced to restrict cash withdrawals from banks, cooperative banks, and post offices. It mandates TDS at the rate of 2% on cash withdrawals exceeding Rs. 1 crore in aggregate during the financial year.
- For payments to contractors, the limit of Rs. 30,000 pertains to the requirement of TDS under Section 194C, which is specific to the nature of payments (contractual payments).
3. **Cash Voucher Limit:**
- There is no specific provision under TDS rules that allows for cash vouchers up to Rs. 30,000 per day to contractors without TDS deduction. The Rs. 30,000 limit generally applies to cash payments where TDS is required to be deducted under Section 194C.
- Payments to contractors exceeding Rs. 30,000 in aggregate during the financial year require TDS deduction at the applicable rates.
### Best Practices and Compliance:
- **Non-Cash Payments:** It’s advisable to make payments through non-cash modes such as cheque, bank transfer, or digital payments to avoid TDS implications and to ensure compliance with tax laws.
- **Record-Keeping:** Maintain proper documentation and records of payments made to contractors, including invoices and agreements, to substantiate expenses and TDS deductions.
- **Consultation:** For specific cases or if there are doubts regarding compliance with TDS provisions, it’s recommended to consult with a qualified tax professional or chartered accountant.
In conclusion, while there are limitations and requirements under TDS provisions, particularly for cash payments to contractors, adherence to non-cash payment methods and compliance with TDS rules are essential to avoid penalties and ensure smooth tax operations.
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