Cash directly deposited into bank account by debtors-40A(3) applicable or not

[Amit Kumar]

Sir, various debtors have directly deposited cash in my current account from different location. what is the impact on me as a creditors and impact and violation on debtors.

[DR.MARIAPPAN GOVINDARAJAN]

In my opinion there will be no impact on you. However the debtors will be considered violation of

Section 40A(3) of the Income Tax Act, if the cash deposits exceeds ₹ 10,000/- in a day.

[ARVIND JAIN]

Agree with the view of DR.MARIAPPAN GOVINDARAJAN Sir, hope the deposit amount is not more than 2 lakh in one instance against one bill go through section 269SS and u may have to file Form No. 61A - Annual Information Return or Statement of Financial Transactions] under section 285BA of the Income Tax Act, 1961

AI Summary

Cash deposit compliance: creditor unaffected, but cash receipts by debtors may breach cash receipt prohibitions and reporting obligations. The creditor is not impacted by debtors depositing cash directly into the creditor's bank account; legal risk lies with the payors. Cash receipts by debtors can violate statutory cash payment restrictions when daily cash receipts exceed the prescribed limit, and larger single instance cash receipts may invoke the prohibition on cash loans/repayments and corresponding information return and statement of financial transactions reporting obligations under the tax law.