Making purchase of more than 1 lac

Hello 
I am buying something on bill (by paying sales tax) the total amount of product is less than 1Lac but after sales tax it is exceeding 1L. I will make the payment in cash. Will there be any legal problem if i make the payment by cash ? What will you advice. I dont have PAN card right now.
Asked 1 year ago in Income Tax from Delhi, Delhi
Any cash payment or aggregate of cash payments during a day exceeds Rs 20,000/- will attract dis allowance of the expenditure u/s 40A (3) and (3A) of the Income Tax Act. Accordingly, the purchases made by you in cash will be disallowed and added to your business income.

As you are doing business, you need to have PAN, as you will not be able to make transactions above Rs 50K through your bank account. Secondly if there is taxable income, you need to file your IT return. Finally if there is no business loss, you can carry forward your loss for set off against your future income, provided you file your IT return within the due date.Further, wherever TDS is attracted,  Tax will be deducted at maximum rate or 20%, whichever is higher and you may not be able to claim credit for TDS, It is therefore advisable for you to have PAN.  
B Vijaya Kumar
CA, Hyderabad
290 Answers
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There is no problem, as long as the transaction is genuine.
B Vijaya Kumar
CA, Hyderabad
290 Answers
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Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction

In your case since you are not claiming any deduction there is no reason why you cannot pay in cash.
You can do the same since it was not for business purpose.
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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If the seller asks then yes you need to show PAN
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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No need generally. However, sellers of products specified u/s 206C of Income Tax Act will have to collect tax at sources on sales made by them. If you are buying any such items covered u/s 206C, then you need to submit your PAN.  You can check if the product you are buying is covered u/s 206C.

B Vijaya Kumar
CA, Hyderabad
290 Answers
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It is not the question whether you have Pan or not, but you have legal source for the money paid in cash.

There is absolutely no problem buying for leisure or otherwise, as long as you can explain source of money from where you got and it is from the tax paid source of Income.

Not  necessary.
Vijay N. Kale
CA, Hyderabad
248 Answers
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 PAN is mandatory for any purchase or sale exceeding the value of Rs 1 lakh.
Form 60 or 61 can be submitted by a person in case he or she is entering into a transaction where quoting PAN is compulsory
Shiv Kumar Agarwal
CA, Delhi
197 Answers
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As per section 40(a)(3) any expenditure incurred by an assessee (whether individual, company, firm etc.) above Rs. 20000/- other than by account payee cheque or draft shall not be allowed as a deduction. Simply put, this section covers those payments over Rs. 20000/- made by bearer cheque or cash.
However, if the payments are made for hiring or leasing carriages for goods such as lorries, trucks etc then the limit is extended to Rs 35000/-.
To further counter any tax evasion, the Income Tax department has specified that this section extends to single payments or aggregate of payments made to a single person in a day. 


Permanent Account Number (PAN) is  mandatory for any purchase or sale exceeding the value of Rs 1 lakh.Form 60 or 61 can be submitted by a person in case he or she is entering into a transaction where quoting PAN is compulsory.
Shiv Kumar Agarwal
CA, Delhi
197 Answers
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for all purchases exceeding Rs1 Lac, you are required to quote your PAN. There is also a penalty of Rs.10,000 for not furnishing PAN or giving the incorrect number. And this is not a one-time penalty; you can be penalized for each default. So, if you furnish an incorrect number to, say, your employer and the bank, you may have to pay Rs.20,000.
In cases where the amount of tax that would have been evaded if the statement or account filed by the person had been accepted as true, exceeds Rs.25 lakh, along with a fine, there may be rigorous imprisonment for six months to seven years.
If the amount is lower than Rs.25 lakh, the rigorous imprisonment can be for three months to two years,  
Anil Bedi
CA, New Delhi
10 Answers
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