cash expenditure / expneses u/s 40A(3)

[BAL KRISHAN GARG]

Dear All Members , I have one querry regarding Section 40A (3) regarding disallowability of cash expenditure of exceeding Rs.20,000 /- at a time . I have one doubt that if A purchases goods worth Rs. 70,000 /- and paid Rs.15000/- at one time in a day but during 2009 -10 on few occassions he paid in cash but not exceeding Rs.20,000/- at a time but during whole day it is Rs.40,000 /- to the same person . Earlier the ceiling was Rs.20,000 /- on one occassion as per my memory .But whether it is now as Rs.20,000/- per day instead of one time ? Please clarify the same . Thanks to all BAL KRISHAN GARG

[CAGOPALJI AGRAWAL]

Yes, Balkishan Ji. From the AY 2009-10, the limit is Rs. 20000/- per expendidure per day.

[Surender Gupta]

Yes, the views of GopalJi are correct. The provisions of section 40A(3) has been amended vide Finance Act, 2008, w.e.f. 1-4-2009

AI Summary

Section 40A(3) Query: Payments to Same Person Exceeding Rs. 20,000 Per Day Are Disallowed Since 2009-10. A participant raised a query regarding Section 40A(3) of the Income Tax Act, which disallows cash expenditures exceeding Rs. 20,000 at a time. They asked if payments made throughout the day, totaling Rs. 40,000 to the same person but not exceeding Rs. 20,000 per transaction, are disallowed. Two respondents confirmed that from the assessment year 2009-10, the limit is Rs. 20,000 per expenditure per day, as per the amendment introduced by the Finance Act, 2008.