EXPENSES PARTLY PAID IN BANKING CHANNEL AND PARTLY IN CASH

[KERAGODEGOPALARAO ANANTHARAO]

WHEN  AN EXPENDITURE IS MORE THAN 10000 SAY 29000, I WILL DISCHARGE 20000 IN BANKING CHANNEL AND 9000 IN CASH, IS IT NOT ATTRACTED 40A(3)

AI Summary

Section 40A(3): Cash payment up to statutory threshold not disallowed; only excess via non-banking channels disallowable If a single supplier's total receipt for the transaction or aggregated receipts in the course of a day does not exceed the statutory threshold for non-banking payments, the cash portion up to that threshold is not disallowed; only the amount paid otherwise than through a banking channel in excess of the prescribed limit is disallowable under the provision. Thus, paying Rs.20,000 by bank and Rs.9,000 in cash would not attract disallowance if the cash component and aggregate cash receipts by that payee remain at or below the statutory threshold and no exclusion applies; exceptions and record/receipt requirements may alter the outcome.