Regarding Cash Transactions

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jignesh sitapara

jignesh sitapara (Querist)
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08 March 2025 How much limit of cash transactions to SUNDRY CREDITORS & Debtors ? under IT.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 March 2025 Section 40A(3) of the Income Tax Act states that any cash payment exceeding Rs. 10,000 in a single day to a creditor will be disallowed as a business expense. This means that if you pay more than Rs. 10,000 in cash to a creditor, that amount will not be deducted from your taxable income, potentially increasing your tax liability.

Cash Receipts from Sundry Debtors:

Section 269ST restricts cash receipts from a single person in a day to Rs. 2 lakhs. If you receive more than Rs. 2 lakhs in cash from a debtor, you may face a penalty equal to the amount received.