Salary paid to Employees

[KUMAR Narasimhan]

Dear Sir / Madam,

Shall we make Salary payment as Cash ₹ 15,000/-

If not how much we can Make?

Because employees/Labours are getting cash Advance Daily and weekly basis

For Example: An Employee/Labour drawing a salary of ₹ 15000/-, taken cash Advance of ₹ 6,000/- and then remaining is paid in bank account at the end of the month, is this acceptable

[ARVIND JAIN]

total Salary payment of 15000 in cash is above the prescribed limit of 10000 as per the provision of Sec 40 A(3) however the later arrangement of 6000 by cash and balance by bank is within the limit and should be acceptable.

[KUMAR Narasimhan]

Dear Sir,

Thank you for the information

[DR.MARIAPPAN GOVINDARAJAN]

40 (3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed], exceeds ten thousand rupees, no deduction shall be allowed in respect of such expenditure.

In you case advance payment in cash and remaining payment in bank account is correct.

AI Summary

Cash payment limits for salary: excess daily cash to a person jeopardises deduction unless balance paid electronically.
Employers must keep any daily cash component of salary to an employee below the prescribed cash-payment ceiling; if aggregate cash paid to the same person in a day exceeds that ceiling, the excess cash portion is not an allowable deduction, whereas a combination of cash advance within the ceiling and the remaining salary paid by bank or other prescribed electronic mode is acceptable and preserves deductibility.