Govardhana Reddy N (Chartered Accountant) (97 Points)
19 March 2013
What is the maximum cash balance that a partnership firm can maintain at the end of financial year as per Income Tax Act
?
Hanish Chaudhary
(Chartered Accountant)
(333 Points)
Replied 19 March 2013
I guess there is no such limit anywhere for any assessee... However, if you keep huge cash balance, you should be able to prove the source of such huge cash....
Govardhana Reddy N
(Chartered Accountant)
(97 Points)
Replied 19 March 2013
I hear it some where as Rs.50,000/-, that's why i am asking that...
VIKAS.A
(SOMETHING IS BETTER THAN NOTHING)
(1095 Points)
Replied 19 March 2013
Ganeshbabu K
(Audit and Tax Advisory)
(48564 Points)
Replied 19 March 2013
| Originally posted by : Govardhan | ||
 |
What is the maximum cash balance that a partnership firm can maintain at the end of financial year as per Income Tax Act? |
 |
Incometax act and others not objecting any thing about holding cashbalance in hand .
However as per wealth tax act the limit of 50,000 has been fixed and holding more than 50,000 will attracts wealth tax.
Ganeshbabu K
(Audit and Tax Advisory)
(48564 Points)
Replied 19 March 2013
Along with above said you should hold cash holding insurance policy
if your cash transactions are in high value transactions
Hanish Chaudhary
(Chartered Accountant)
(333 Points)
Replied 19 March 2013
@ Govaredhan
No sir, there is no such limit anywhere.
@ Ganesh Babu
As per wealth tax act, the cash balance is excess of Rs.50,000/- will be treated as asset only in case of Individual and HUF. In case of any other person, the amount of cash not recorded in the books of accounts shall be treated as asset. Hence, any amount of cash in case of person other than individual or HUF, shall not be treated as Asset as per Section 2(ea) (6) of Wealth Tax Act, 1957 if the same is recorded in the books and shown by the balance sheet.
Secondly holding cash in excess of 50,000 in case of individual or huf also doesnot attract the wealth tax straight away. The charging section shall be complied for i.e the amount of assets should be more than Rs.30 lacs on valuation date.
Thirdly, the wealth tax applies only to individual, HUF and company. It does not apply to partnership firm. However, the valuation of interest in a firm or AOP may be taxable in hands of partners as per Rule 15 and Rule 16.
Pleae correct me if i m wrong.
Ganeshbabu K
(Audit and Tax Advisory)
(48564 Points)
Replied 19 March 2013
Yes.. it is thanks for correcting me @ Hanish sir..i missed it..
Agrees with you,
CAclubindia
