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Payment made more than 20000 to sundry creditors

Adithya (udupi) (49 Points)

26 December 2017

is payment made to sundry creditors is dissallowed

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kumar (CA-Final) (113 Points)
Replied 26 December 2017

payment made to any person in cash ... whether he is sundry creditors or otherwise ..is disallowed when such amount exceeds 20000

provided there are certain conditions where such threshold limit is ignored..

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Pardeep Garg (CA-Final Student) (801 Points)
Replied 26 December 2017

from A.Y.2018-2019 the limit is of ₹10,000.

3 Like

SHUBHAM BHARGAVA (44 Points)
Replied 26 December 2017

any cash payment made in excess of ₹20000 is disallowed except for purchase of capital assets

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 26 December 2017

Originally posted by : Pardeep Garg
	from A.Y.2018-2019 the limit is of ₹10,000.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 26 December 2017

I AGREED TO MR PRADEEP GARG

In order to disincentive cash transactions, it is proposed in the budget w.e.f. AY 2018-19(FY 2017-18) to amend the provision of Section 40A of the Act to provide the following:

i. To reduce the existing threshold of cash payment to a person from twenty thousand rupees to ten thousand rupees in a single day; i.e any payment in cash above ten thousand rupees to a person in a day, shall not be allowed as deduction in computation of income from “Profits and gains of business or profession”........................................

As nothing has been specified for in the case of payments made for plying, hiring or leasing goods carriages limit is 35000/- ; It seems it remains unaffected

1 Like

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SHUBHAM BHARGAVA (44 Points)
Replied 26 December 2017

section 194c in case of transporter

mudit gupta (CA) (330 Points)
Replied 27 December 2017

yes applicable

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 27 December 2017

Originally posted by : SHUBHAM BHARGAVA
	section 194c in case of transporter

Please refer this article https://www.linkedin.com/pulse/tds-payments-transporters-amendment-s194c-from-01062015-shakya

Rishi Mehta (Ur friend ) (1533 Points)
Replied 27 December 2017

Cash Payment made to creditor in excess of monetary limit specified shall be deemed as business income of the Financial Year of Payment.

Subject to following two condition:

(i)Expenditure has been allowed as deuction in the financial year in which expense incurred and

(ii) In coming Financial Year cash payment is made in contravention of specifed monetary limit.

Adithya (udupi) (49 Points)
Replied 27 December 2017

if it is allowed as expenditure then it can be dissallowed. but in this case payment to creditors is not allowed to profit and loss account.how can it be dissallowed

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Rishi Mehta (Ur friend ) (1533 Points)
Replied 28 December 2017

Two methods of accounting are specified under the Act for computing Profit & Gain of Business or profession and these are (1) Accrual Basis of Accounting and (2) Cash Basis of Accounting.

Assessee has an option to follow either one of the two methods of accounting. Change in method of accounting once opted allowed or not has to be seen from ICSD I “Accounting Policies”

Now i hope you will understand the implication of Accrual system of Accounting for an outstanding expense, which is in your case resulted into “creditor”.

Adithya (udupi) (49 Points)
Replied 28 December 2017

I know about cash and accrual system. i am talking about trade creditors if we purchase goods on acrrual basis then he will become trade creditor. we pay him for the purchase of stock and not expense.