Disallowance of cash payment expenses

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Sidhardh (Querist)
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18 November 2011 Dear Experts,

I would like to know the following:

1. Cash payment >=20,000/- will be disallowed or >20,000/- only will be disallowed?

2. If Freight Paid in Cash more than Rs.20,000/- to a person in a single day against different invoices will be disallowed or allowed? Any exception to payment of freight in cash u/s 40(A)(3)?

3. Some experts are telling that, cash payment limit to a party per day increased from Rs.20,000/- to Rs.30,000/-. Is it true? What is the effective date of this amendment?

Thanks in Advance.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 November 2011 1) section attracts if cash payment exceeds Rs.20,000/-
2) & 3) 40A(3) has to be verified per person per day. In case of freight, the ceiling is increased to Rs.35,000/- by the Finance (no.2)Act,2009 w.e.f 1/10/2009.

Sidhardh

Sidhardh (Querist)
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18 November 2011 Thank very much you sir.

But, I am unable to get the copy of notification for increment of ceiling in any website. Can u please share the link with me.

Thanks.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 November 2011 It is not notification. Amendment has been made in the section itself which can be seen through www.incometaxindia.gov.in