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Rent payment in cash

Supriya (Manager) (25 Points)

04 March 2013

Can rent paymnet in excess of Rs. 20000 be made in cash?

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6 Replies

CA Mahavir Shah (Practicing Chartered Accountant) (1130 Points)
Replied 04 March 2013

If it is paid for commercial puspose or hired by any commercial organisation thn you should not pay it beyond Rs.20000.

Because it will be disallowed as per Income Tax.

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CA.D.RAGAVAN (CHARTERED ACCOUNTANTS) (219 Points)
Replied 04 March 2013

Any Expenditure or Purchases made by Cash beyond Rs.20000/- it will attract the provisions of Section 40A(3) and will be added to Income. The Rent liability can be created at the end of each month and the liability can be settled by multiple payments on different dates keeping the each payment is below Rs.20000/-

(Guest)

no expenses should be done in excess of Rs. 20000 cash else the expense will be disallowed.

Source: https://www.indiantaxupdates.com/2013/02/15/section-40a3-disallowance-of-cash-payment-exceeding-rs-20000/

Supriya (Manager) (25 Points)
Replied 04 March 2013

40A(3) is applicable for business. In case an individual tax payer is paying rent in cash beyond Rs. 20000 to any individual taxpayer, will there be any tax implication?

PRITAM JAIN, CA , CS (Practising CA CS) (398 Points)
Replied 04 March 2013

Hi Supriya,

It is already mentioned by other experts above that such disallowance is governed by section 40(A)(3) which is applicable to assessee whose income is assessed to tax as per chapter of business or profession. So if your income is assessed to tax other than income from business or profession then mode of payment is not a matter of cocern in your case.

Thanks and Regards

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CA Prashant Gupta (DGM (F & A)) (14068 Points)
Replied 04 March 2013

Originally posted by : PRITAM JAIN, CA , CS
	Hi Supriya, It is already mentioned by other experts above that such disallowance is governed by section 40(A)(3) which is applicable to assessee whose income is assessed to tax as per chapter of business or profession. So if your income is assessed to tax other than income from business or profession then mode of payment is not a matter of cocern in your case.