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Fixed Assets Purchase in Cash

Ajit Choudhary (32 Points)

18 January 2021

Can we purchase a fixed in cash?

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8 Replies

Dev Prajapati (215 Points)
Replied 18 January 2021

No, Please refer Second Proviso to section 43 of Income Tax Act,1961...
If payment is made by cash mode then it will not be considered for capitalisation...

4 Like

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CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 18 January 2021

You should purchase through bank otherwise it will be disallowed

Krishna Chaudhary (Accountant) (4531 Points)
Replied 18 January 2021

Better to purchase through bank account

5 Like

CA Rashmi Gandhi (Chartered Accountant) (86308 Points)
Replied 19 January 2021

You can but coat of Fixed assets would be below 10000..

1 Like

sabyasachi mukherjee (27312 Points)
Replied 19 January 2021

Purchase of fixed asset is generally guided by Accounting Standard 10.
The guidelines are specifically stated there.
All expenses incidental to accquisition of such fixed asset are to be capitalised till the asset is first put to use.
Income tax act has specific guidelines.
Refer Sec 40 a (3) has some limitation.
Either the amount should not be more than 20000.
But , if more than 20000 should be made in account payee cheque.

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Krishna Chaudhary (Accountant) (4531 Points)
Replied 19 January 2021

It's 10000 not 20000.

agar aap ek din mein 10000 rupaye se jyada Pay karte Hain to aap use amount per depreciation charge nahin kar sakte per aap chahe to in multiple days you can pay more than 10000.

it is interpreted from the law.
you can check the bare act of income tax for more clarification.