Avoid Cash Payments and Cash Receipts, both – Income Tax updates

Avoid Cash Payments and Cash Receipts, both – Income Tax updates

Avoid Cash Payments and Cash Receipts, both – Income Tax updates

AVOID Cash Payments and Cash Receipts ( both )


Section 40A(3) /(3A) :

Revenue Expenditure :- Deduction not allowed for expenses made in cash to a person exceeds Rs. 10,000 in a day.  ( this is per one assessee to one assessee ). Including all payments aggregated for that 1 day.

(However in case of payment to Transporters, Limit is Rs. 35,000 in case of goods carriage).

There is no Exception for Hospitals, Donations, Welfare, Salaries, Wages, or anything else.


Section 43(1):

Actual Cost of Asset : Any amount incurred/purchase for the fixed asset, in cash to a person exceeds Rs. 10,000 in a day , Consequently, depreciation cannot be claimed.


Section 269SS :

Acceptance of Loan/Deposit/Specified Sum i.e Rs 20000 or more : Prohibits acceptance of loan/ deposit/ ‘specified sum of Rs. 20,000 or more in any other mode. Limit of Rs. 20,000 is aggregate of existing outstanding loan, etc and proposed amount of loan, etc.


Section 269T :

Repayment of Loan/ Deposit/ ’Specified Advance’ : Prohibits repayment of loan/ deposit/ ‘specified advance of Rs. 20,000 or more in any other mode. Limit of Rs. 20,000 is aggregate of existing outstanding loan, etc and proposed amount of loan, etc ( along with interest).


GIFT RECEIVED

56(2)(x)(a) :

RECEIPTS OF CASH AS GIFT : Non Taxable aggregate up to Rs. 50000 from Relative/Non Relative, IF Received more than it will taxable as per Income Tax Act.


MEDICLAIM POLICY PAYMENT

(u/s 80D) :

Payment in Cash is not allowed . Deduction allowed only for Non- Cash Payments,

Deduction available for Preventive Health Check ups in Cash.


DONATION

Donation TO TRUST /SOCIETY (u/s 80G) :

No Deduction , if Payment in cash exceeds Rs. 2000


Cash “Receipt over 2 lakhs” also banned

100% Penalty for Cash receipt over Rs 2 lakh, even if it is a Business Receipt

https://www.livemint.com/money/personal-finance/cash-receipt-of-rs-2-lakh-or-more-attracts-income-tax-penalty-11606205071792.html

“…..If a person receives any sum in contravention of the provisions of section 269ST, he will be liable to pay a penalty of a sum equal to the amount of such receipt under Section 271DA….”


Exception and temporary Relief upto 31-5-2021

 

However, Receipt of over Rs 2 lakh allowed for the Covid Relief 1-4-2021 to 31-05-2021

The Income Tax department has allowed hospitals and healthcare facilities providing covid-19 treatment to accept payment of 2 lakh and above in cash.

An official notification late on Friday relaxed a rule that barred payments of 2 lakh and more in cash, in view of the hardships caused by the second wave of the pandemic.

https://www.livemint.com/news/india/hospitals-can-accept-cash-payment-of-rs-2-lakh-and-above-11620444805175.html

The relief is applicable to hospitals, dispensaries, nursing homes, covid care centres and similar other medical facilities offering treatment to coronavirus infections, said the notification. This relaxation is applicable to payments received between 1 April and 31 May.

However, there is one rider. To make cash payments, hospitals have to get the Permanent Account Numbers (PAN) or the Aadhaar identification number of the patient. In case the payment is made by a person other than the patient, then these details about that person and the relationship between the two have to be collected by the healthcare facility.


Even if it is Hospitalisation of your Staff in a Hospital. Do not pay CASH.

Pay by any Digital mode, UPI, NEFT, RTGS, etc. etc. Do not pay in CASH 

Some examples : https://taxguru.in/income-tax/rs-2-lakh-cash-transaction-limit-wef-01apr2017-details-examples.html


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