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FORM PARTITION 40a (3)

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 John asked over 3 years ago

Hello I am in a trading business. When I purchase goods i have to pay freight of Approx. 80000/- in cash to the truck driver when he gives me Built. Please suggest me what are the maximum limit up to which i can pay in cash without attracting any disallowance and applicability of any TDS provision on it. please provide practical solution. THANKS

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2 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Prabhash answered over 3 years ago

Hi Friend, Section 40A(3) apart from dis-allownace of cash payment exceeding 35000/- in case of transporter, also has some exception which may be usefull in your case which are as follows: Meaning the provision of section 40A(3) may not apply under following situations 1. If the banking facility is not available at a place where the drive resides or he has no bank account. 2. The transported goods are agricultural products. 3. Banking facility is not available on the date of making payment (Like Sunday or Holyday etc) Above all if you are able to show the business urgency for making cash payment nothing will be disallowed.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Sameer answered over 3 years ago

Dear Sir As per section 40A(3) of income tax act 1961:- Any payment made to a Transporter for plying or hiring of transport - In a single day - To a Single tranporter - Is more than INR 35,000. - Through other than Cheque, A/c payee, Bank is disallowed under section 40A(3) of income tax act 1961. In Short words :- You can pay freight charges in cash upto INR 35,000 in a single day to Single Transporter For TDS :- If Transporter submit a Copy of PAN card than no need to deduct TDS on payment made to Transporter.

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