I work in the telecom sector, where our company provides telecom-related engineering services to major telecom partners. In this sector, much of the work is carried out by daily wage laborers, such as civil construction laborers, painters, earthing laborers, excavator operators, and JCB operators. As these activities are typically performed by daily laborers, we don't have formal proof of payment, except for the cash vouchers provided by our staff, who make the payments to them on-site.
We deposit funds to facilitate the work, and the assigned staff arranges for the laborers to be present at the site and makes payments directly to them. The staff typically takes photos of the work being carried out, but we do not receive any formal proof of payment other than the cash voucher.
Given this situation, what is the cash limit for expenses allowed under income tax regulations? What kind of proof do we need to collect for such payments? Since we operate across multiple states, how can this process be streamlined? What should we do in case the income tax department raises objections regarding cash expenses? I would appreciate your suggestions on how to address these concerns.
CAclubindia
