Cash Payment Above Rs. 20000 - Income Tax
Deepak Kumar
(Querist) 15 June 2011
This query is : Resolved
Hi
I have come across a interesting case wherein I wants to take your opinion.
Case: One construction company having various construction sites wherein site-in-charge have been appointed for dealing day-to-day expenses of the concern site. The company is transferring required amount of fund to their account for meeting expenses.
What I observed there that for avoiding cash payment above Rs. 20000, site-in-charge is making payment by issuing account payee cheque from his personal account to parties.
I wants your opinion whether this practice is legally allowed to avoid cash payment exceeding Rs. 20000 or whether it still attracts section 40a(3)for company.
Apart from the income tax, Is there any other non-compliance on the part of company.
R.Ramachandran
(Expert) 15 June 2011
One is not supposed to make cash payment above Rs. 20000/-.
You say that the site incharge makes payment by cheque.
By issuing the cheque, he is not violating the provision in respect of maximum permissible payment by cash.
Then what is your problem /Issue?
