Cash payment limit

This query is : Resolved

Ariyanathan (Querist)
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26 June 2012 Please guide us, shall we pay cash more than 30,000/- in one time to one person. we are running a firm. Pl.help me.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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26 June 2012 No, Cash payment in excess of Rs. 20000 in a single day to single party will be disallowed.

C.A Anshul Singhal

C.A Anshul Singhal (Expert)
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26 June 2012 Amounts not deductible in respect of expenditure exceeding Rs. 20,000† [Sec. 40A(3)] * - If an assessee incurs any expenditure in respect of which payment in excess of Rs. 20,000 is made otherwise than by a crossed cheque or crossed bank draft, 20 per cent of such expenditure will be disallowed as expenditure. Rule 6DD, however, prescribes the cases and circumstances in which payment in excess of Rs. 20,000 may be made otherwise than by a crossed cheque or crossed bank draft without attracting the disallowance. Even payment made for purchase of goods falls within the expression “expenditure” occurring in this section.

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C.A Anshul Singhal

C.A Anshul Singhal (Expert)
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26 June 2012 EXAMPLE - FIRST BILL----RS 35000
SECOND BILL---RS 40000

YOU PAY TO PARTY FOR AGAINST FIRST BILL ON 26/6/12 IN CASH RS 15000 & RS 19000 AGAINST SECOND BILL
BOTH ARE PAID IN CASH BOTH ARE ALLOWED U/S 40A(3).

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