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Acceptance/Deposit of Cash agst.sales of product will be tax

Hasmukh (Business) (32 Points)

06 February 2009

Sir,

Can we accept unlimited cash towards supply of material ?

Will it be harmful under Income Tax Law ?

Will it be taxed ?

Is there any case law for this, if yes than send me.

Hasmukh Patel

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Pranay Shukla (CA) (52 Points)
Replied 11 February 2009

Hello,

Sec 40A(3) of income tax act,1961 is specifically deal with expenditure made in cash above Rs.20000/- and also provide exception in Rule 6DD. Now refering your questions, it is crystal clear that we can accept cash above Rs.20000/- for the sale of material. It will not taxable.