Cash payment Limit

[Kailash Garg]

Dear Sir,

We are one of the manufacturer of soya bean products, in Madhya Pradesh, where in we purchase seeds from farmers of our locality. But since our production is vast local purchasing does not fulfill our requirements. Can we purchase soyabean meal from other villages also in order to fulfill our requirement. And if we pay them cash from our banks shall we face any liabilities because there is certain limit as per income tax act.

In order to not abide any law please let us know how can we sort out this problem.

AI Summary

Soybean Manufacturer Queries Cash Payment Limits; Section 40A(3) Caps Daily Cash Transactions at 10,000 to Avoid Tax Issues. A manufacturer of soybean products in Madhya Pradesh inquired about purchasing soybean meal from other villages due to insufficient local supply. They asked if paying in cash would lead to liabilities, considering income tax regulations. The response clarified that under Income Tax section 40A(3), cash payments to a person should not exceed 10,000 per day, as exceeding this limit would result in disallowance of expenses during income tax filing.