Cash payment Limit, Income Tax

[Kailash Garg]

Dear Sir,

We are one of the manufacturer of soya bean products, in Madhya Pradesh, where in we purchase seeds from farmers of our locality. But since our production is vast local purchasing does not fulfill our requirements. Can we purchase soyabean meal from other villages also in order to fulfill our requirement. And if we pay them cash from our banks shall we face any liabilities because there is certain limit as per income tax act.

In order to not abide any law please let us know how can we sort out this problem.

Posts / Replies

[Saravanan Nagaraj]

Dear Sir,

As per Income Tax section 40A(3), you shouldn't make cash payment to a person morethan ₹ 10000/- or aggregate amount should not exceed more than ₹ 10000/- a day.

These expenses would be disallowed at the time Income tax filling.

N Svia Saravanan

Tax Care Services

Coimbatore