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Cash payment limit under Section 40A(3) is:
ARs. 50,000 (per relevant Section)
BRs. 20,000
CRs. 5,000
DRs. 10,000 (Rs. 35,000 for transporters)
Answer & Solution
Correct answer: D. Rs. 10,000 (Rs. 35,000 for transporters)
1. Section 40A(3) disallows expenditure if payment exceeds Rs. 10,000 to single payee in a day otherwise than by a/c payee cheque/DD/electronic.
2. Limit is Rs. 35,000 for plying/hiring/leasing goods carriages.
3. Exceptions under Rule 6DD apply (no bank, etc.).
_Source: ICAI BoS CA Final Paper 7, Ch 3 "Profits and Gains of Business or Profession"_
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