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Cash payment of rs 150000/-

vishak (accounts) (488 Points)

06 November 2015

one of my assessed purchase materials for maintanance of there office. the bill date of that is march 2015. and also they forget to account that. in June 2015 they made payment of rs 150000/- in cash. can claim as an expense in p&l ?

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10 Replies

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 06 November 2015

For accounts purposes yes. But for income tax purpose you cant claim the expense.

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MAYUR BIYANI (Assistant Manager-Taxation & Accounts) (142 Points)
Replied 06 November 2015

Income tax it wil be disallowed under section 40 (A) 3...it wil be deemed to ur income wen computing tax

S. Shiroor (Others) (1207 Points)
Replied 06 November 2015

Can he not show the amount expended of Rs 20000 per day for 8 days.??

Ruchi (CA) (1410 Points)
Replied 06 November 2015

For Income tax purposes, it wouldn't be allowed. firstly it is pertaining to previous year. Secondly, payment is made in cash. For accounting purpose, you can show it, but it will be disallowed.

If you still want to claim it , then revise your last year return, show the payment as outstanding and then make the payments in cash in current year in different instalments in amounts below Rs. 20000. But you cant claim it in the current year.

I think you should better skip it and not show it.

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 06 November 2015

Hi shiroor, it is aggregate of payments in a single day. As long as it is paid on sigle day no allowance even if bill is splitup.

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MAYUR BIYANI (Assistant Manager-Taxation & Accounts) (142 Points)
Replied 06 November 2015

agreed with Karthik,

S. Shiroor (Others) (1207 Points)
Replied 06 November 2015

I am not from accounts. so please explain in simple terms

The party can revise the bill and give fresh bill on 1st April 2015.

rs 20000 can be booked against the bill every day or week for 8 times .any probelm with this.

Arshad (Article) (62 Points)
Replied 07 November 2015

No problem. You may take a fresh bill any dated after 31.03.2015 simply 01.04.2015 or any later date. And made the payments rs. 20000 each per day. If u do like this then payment will not be disallowed in Income Tax.

Rajesh (Service ) (7576 Points)
Replied 07 November 2015

How can you take a fresh bill. Dont forget that the vendor have also accounted this transaction in his books of account and also paid the taxes. It may be harmful for you.

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 08 November 2015

It doesnt depend on how one books as long as payment in single day exceeds 20000 for that particular expense. You can split payments also in your books but bank statement cannot be changed which is conclusive evidence. After making payment exceeding rs 20000 which reflects in bank account the mere changing of entry will not gain you any advantage.