Hi,
Although to my mind section 269ST will not apply to this scenario. However, section 40A(3) restrict any cash payment over and above 10k.
Hence, you should avoid making such cash payments.
Cash transaction
The query is regarding 269ST I have an employee with a salary of Rs. 18,000 per month. Can I pay him in cash every month, total salary yearly would be Rs. 2,16,000/- Is the salary every month considered a different event or the same event? I also pay him a commission of Rs. 1,00,000 So salary and commission are combined as one event or considered different events for making payment in cash. Please guide.
Asked 6 years ago in Income Tax
Even though you are making payment every month but it's a single transaction which is paid every month and this will be a problem for your employee and you would attract problem under 40A(3) for making such payment.
So don't try it.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
- Both are different transactions relating to two events though paid to a single person. In respect to salary, there would be 12 transactions and paid in separate months so no clause is applicable. In respect to commission, it is a one time payment on the basis of turnover or any other criteria which has no co-relation with the salary payment. Both the payments are independent and not interdependent.
- Section 40A(3) would be applicable.
Payment is going to be made Rs. 9000/- on different days. so i guess 40a(3) should not come into picture. ?what say? Now i understand : if single payument is less then 10k per day then salary per month for 12 months even if exceeds 2 lakhs its will be considered as different event every month as per 269ST comission will be a seperate event and not combilned with salary for 269ST
Asked 6 years ago
Yes
Hello,
Sec. 269ST won't be applicable.
Rather Sec. 40A(3) would be applicable if you pay salary more than Rs. 10,000 in cash. Disallowance of 100% of salary would be made.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
Yes, your understanding is correct.
Dear Sir,
Hope you are doing well !!
As per section 40A(3), where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, exceeds Rs 10000/, no deduction shall be allowed in respect of such expenditure.
So, please dont make payment of salary in cash over and above Rs 10000.
However, section 269ST is not applicable in your case. It prohibits any person to receive an amount of Rs.2 lakh and above in cash:
(i) In aggregate from a person in a day, or
(ii) In a single transaction, or
(iii) In respect of transactions relating to one event or occasion from a person .
Yes, if payment is going to be made Rs. 9000/- on different days then section 40A(3) won't applicable.
Also, your interpretation is absolutely correct .
Your understanding is correct.
Hello Sir,
Yes, your understanding is correct.
Section 40A(3) would be not come into picture if you pay the salary Rs 9000/- in cash on different days.
Yes, commission will be a separate event and not combined with salary for 269ST.
Hi,
In my opinion even if you pay the salary on different dates, salary slip is generally for a month and if the salary for a month is more than 10k, you can't pay in cash.
Hi
Yes ,In such case,40A(3) will not be applicable.
your understanding is correct.Both are separate event,so not combined with 269ST.
Hope it helps
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