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Salary exceeding 30k in cash

12 June 2017

Can a salary above Rs.30000 pm be paid in cash? The rule restrict cash transaction upwards of 10,000 in a day and earlier it was 20,000 per day. But if the payment is made weekly, or bi-weekly in installments is that legal?

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6 Replies

Ravi Reddy (ca final) (139 Points)
Replied 12 June 2017

it i legal,restriction only to single day

Attached File : 1330253 20170612155305 section 40a 3 disallowance of expenses made in cash exceptions.pdf downloaded: 130 times

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Abhimanyu Dabas (9 Points)
Replied 12 June 2017

Hi Ravi,

I have read this article. But it says you can pay salary in cash if the person is in some remote area, like a ship or something. I am talking if it's legal for a scenario like let's say in Mumbai city, by a PVT LTD company, where you have all the banking facility (as against a ship), but an employer is paying 45K to his employee in parts? Is that legal ? or will it invite any legal repurcussions?

Ravi Reddy (ca final) (139 Points)
Replied 12 June 2017

it is not illegal if it is paid in parts subject to condition that payment by cash in a single day does not exceed Rs.10,000

Abhimanyu Dabas (9 Points)
Replied 13 June 2017

Somemone said that it's mandatory for a PVT LTD with more than 10 employees to pay in NEFT or cheque.

Someone from HDFC bank (RM level) said one cannot pay more than 20,000 salary in cash.

PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1443 Points)
Replied 13 June 2017

If you want to know about it then you have to follow first the provision of section 40a(3)...

You can't make the payment more than Rs. 10,000/- in a day in a person.

But this topic is not very important...

Kindly go through a logic:-

If you paid salary in cash more Rs. 10,000/- how the department may able to know that you paid salary in cash more than Rs. 10,000/- untill your book of accounts called for scrutiny u/s 143(2)..