Related to disallow of expenses paid in cash

This query is : Resolved

Nipun (Querist)
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19 May 2013 while checking this limit whether we need to check payments made to party concerned or to different persons to whom we paid on behalf of party concerned
If its party concerned then please provide solution to this problem
one of my client who is rice mill owner
purchase rice from various parties and made payments of freight to truck drivers in cash and number of trucks are purchased from single party in a day and aggregate payments of fright usually cross 20000 in a day but paid to different truck drivers
whether in this case all payments of freight made to different truck drivers belong to same party in a day should be disallow ?

Nipun

Nipun (Querist)
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Guest

Guest (Expert)

19 May 2013 In case of made payment made for plying, hiring or leasing goods carriages the maximum limit is 35000 instead of 20000.

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Nipun

Nipun (Querist)
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19 May 2013 What if payments cross 35000 too ?

Guest

Guest (Expert)

19 May 2013 Section 40 A (3) disallow expenditure if payment exceeding 20000/35000 is made on single day to a single person other than a/c payee cheque or a/c draft.

In your case, payments made to different drivers will not matter till the bill is on same party on a single day and exceeding the limit.

The expenditure will be disallowed as per section 40 A (3) but must read Rule 6 DD, it contains list of exceptions of Section 40 A (3).