Salary in Cash over Rs 20000 falls under Section 40A[3].

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Salary in Cash over Rs 20000 falls under Section 40A[3].

If a person is receiving a salary of around Rs 20,000 per month can he be paid in cash ? His TDS etc will be deducted as per the existing norms and will his employer face any problems if the person is paid fornightly, after the requisite TDS deductions, in Cash ? From: ………………kuttimukund@…..com

Section 40[A][3] of the I T Act which make it mandatory to make payment in case of business expendiure above Rs 20000 in cash , is also applicable on Salary. Thus ,if the payment is made above Rs 20000 , which may happen in case if Fortnightly payments, the A.O may disallow 20% of such payments.
I feel it is prudent not to give controversy to the issue, and better that pay the amount of salary by account Cheque or Draft.

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