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cash payments per day

Siva Raj (358 Points)

21 December 2018

please explain maximum limt of cash payments per voucher as per Income tax act

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Aman Kumar (Accounts Executive) (744 Points)
Replied 21 December 2018

Limit is 10000/- per day per person

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ANIMESH CHOWDHARY (Practicing CA) (305 Points)
Replied 21 December 2018

ec. 40A(3): Where any expenditure in respect of which payment is made in excess of Rs. 10,000/- (w.e.f. A.Y. 2018-19) at a time otherwise than by Account-payee cheque or draft or use of electronic clearing system through a bank account, 100% of such payment shall be disallowed.

However if payment is being made for plying, hiring or leasing goods carriages then Limit for these section is Rs 35000/-, instead Of Rs. 10000/-

In respect of Capital Expenditure (Fixed Assets)

Where an assessee incurs any expenditure for acquisition of any asset in respect which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque/ bank draft or use of electronic clearing system through a bank account, exceeds Rs 10,000, such expenditure shall be ignored for the purposes of determination of actual cost of such asset. (Meaning thereby no depreciation benefit will be available on such amount).

Amendment by Finance bill 2018:

Provision of Section 40A(3) and 40A(3A) will be applicable to Charitable and Religious trusts for the purpose of determination of application of fund. Meaning thereby violation of provision of these sections will not be allowed as application of fund.

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