Dear all, Being a garments manufacturers, I use to send goods to different parties in different states, there are some clarifications regarding payments i receive.. 1) Parties directly depositing invoice payment into my account instead of depositing a cheque, is that correct? 2) Parties ask their party who is in a different state to make the deposits into my account for my bills, is that correct? 3) Sometimes I raise Cash invoice for 40000 to 50000, what is the maximum cash i can receive, some says I can't receive more than 10000 in cash, but as far as i know, Single Cash transaction cant exceed 2 lac... Need clarification on this... 4) I mostly offer salaries in cash to my staffs which is in the range of 15000 to 20000 a month, My accountant said, cash voucher should not raised above 10000, pls clarify. Thank you all in advance.
1) There is no problem as law allows electronic transfer as valid mode of payment.
2) Payment should be made from only those parties in whose names bills are raised.
3) Maximum amount is 2 lacs per transaction per day.
4) For expenses there is a maximum cap of Rs 10,000 per transaction. If 15000 to 20000 amount belongs to more than one employees then you can prepare one cash voucher for entire amount and attach a list of employees along with their signatures on receipt ticket.
Hi,
Please find below response to your queries:
1. That should be fine. Since the amount is deposited in your bank acvount it should be okay.
2. Preferably dont allow this. This may cause confusions later.
3. Your understanding is correct. The maximum amount is 2 lacs per transaction per day.
4. as far as the expenses are concerned, 10,000 is the max limit per transaction.
Hope that clarifies.
Regards,
Nikhil.
Hi,
Thanks both of you for giving the answers.. here is my compilation based on your answers,
In Business, 1)Sales & Purchases cash transaction limit is 2 lac per transaction per day.
2) Expenses like salaries, rent, goods transportation charges, etc. max transaction limit is 10k.
Are my interpretations correct?
Yes the interpretation is correct.
Regards,
Nikhil.
Sale - limit is 2lacs per transaction
Purchase and other expenses- 10000 per transaction
1.No, you kindly note this -.
Cash Receipt of Rs 2 lakh or more, from a single person in a day is not allowed even if the amount has been paid through multiple transactions during the day which are below Rs 2 lakh.
Cash receipts of Rs 2 Lakh or more which are related to a single transaction are prohibited.
Cash transactions or cash receipts related to a single event or occasion, can not be more than Rs 2 Lakh
.2. All the expenses above 10.000 need to be in the mode of payment other than cash.
Hi,
1. It is a grey are and invite attention of tax department if Transactions are huge. If it's one off Transaction, then there is no issue.
2. Payment should be received from Frome?he same person in whose name bill has been raised.
3. Aggregate cash Receipt of Rs 2 lakh or more, from a single person in a day is not allowed
Additionally, cash receipts of Rs 2 Lakh or more which are related to a single transaction are prohibited.
Further, Cash transactions or cash receipts related to a single event or occasion, can not be more than Rs 2 Lakh
4. Cash expenses more than 10k would be disallowed.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.Com
There is a slight correction in your first point's interpretation.
Say if you have sold good worth RS. 3 Lacs to a person and you receive 1.5 lacs first day and remaining amount next day, then also it will be an issue. Because cash receipts of Rs 2 Lakh or more which are related to a single transaction are prohibited.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.Com