Cash Payments under FCRA

Section 40A (3) (a) of the income tax Act provides that any Expenditure incurred in respect of which payment is made in a sum exceeding Rs 10000/- in a single day otherwise than by account payee Cheque drawn on a bank or by an account payee bank draft or through use of electronic clearing system, shall not be allowed as deduction.

However, as per the Do and Don’t’s issued by the FCRA department for the FCRA Registered associations, it has been noted that the Cash Expenses and withdrawals is limited uptoRs. 2,000 in a single day. Such measures have been imposed in order to restrict the cash transactions in an FCRA Registered association.

Therefore, it is advised to follow the respective guidelines strictly in order to avoid any unnecessary scrutiny from the statutory authorities.