Cash Payment more than Rs.20,000/-

[DHARMENDRA KASLE]

We ( PVt.Ltd.Co.) made cash payment for Office picnic Rs.20,000/- paid to Resort in FY 2011-12. Will it disallow under I.Tax Rule of the  Rule 40(A) 

[CAGOPALJI AGRAWAL]

No, if the payment exceeds 20000/- then the provisions of section 40A(3) would be attracted.

AI Summary

Cash payment limit triggers applicability of section 40A(3), impacting deductibility of business expenses. The advisory states that where a business makes a cash payment for expenditure and that payment exceeds the specified monetary threshold, the statutory provision section 40A(3) becomes applicable, invoking the provision's mechanism affecting the treatment of such payments for income-tax deductibility.