22 August 2009
My sister heads a branch of a private limited company. Petty cash is required for payment of expenses to tune of Rs.80 - 90 thousand per month. The company was sending cash for payments but now they are insisting that they will send her a payee's account cheque and she should withdraw the cash and pay the petty cash amounts. This transaction does not seem right to me from point of view of receiving and withdrawing such large amounts per AMLA as well as the Gift Tax provisions of credits to account other than from relatives by individuals. I hope I am wrong. Can someone please convince me that I am wrong.
24 August 2009
This problem can solved by open a current a/c by name of the company by giving rights to operate that a/c to the head of that branch.deposit/ transfer the petty cash amt on that a/c so the head of branch can utilise that amt for petty cash. there will not arise any question.
26 August 2009
Thanks. The problem is sorted out. My sister was informed that her company was opening a salary account for the reimbursement. What they actually meant was that it was a reimbursement account that is similar to a salary account and it seems that the account is a current account linked to the parent account of the company. The confusion came up because of the word salary account.
CAclubindia
