Hi Tarun, Your question is not clear, can you reform your sentence/question so that we understand you better to clarify the issue to your satisfaction ?
From India, Bangalore
1076From India, Bangalore
Dear Tarun-Sachdeva1,
Rs.12 lakhs CTC per annum means per months it comes to Rs. 1 lakh. May be monthly gross not less than 50 K.
It seems you are from Mumbai, i.e. from the State of Maharashtra.
In Maharashtra, if Payment of Wages Act is applicable to the employee then it is mandatory for you to pay him the salary by cheque or bank transfer.
If Payment of Wages Act is not applicable to the employee then it is not mandatory for you to pay him the salary by cheque or bank transfer. However, it will be a violation of Income Tax Law. Cash exceeding Rs. 20k is not permitted by Income Tax Law.
On implementation of Wage Code, you will not be allowed to pay by cash to any employee.
From India, Mumbai
Rs.12 lakhs CTC per annum means per months it comes to Rs. 1 lakh. May be monthly gross not less than 50 K.
It seems you are from Mumbai, i.e. from the State of Maharashtra.
In Maharashtra, if Payment of Wages Act is applicable to the employee then it is mandatory for you to pay him the salary by cheque or bank transfer.
If Payment of Wages Act is not applicable to the employee then it is not mandatory for you to pay him the salary by cheque or bank transfer. However, it will be a violation of Income Tax Law. Cash exceeding Rs. 20k is not permitted by Income Tax Law.
On implementation of Wage Code, you will not be allowed to pay by cash to any employee.
From India, Mumbai
There is nothing wrong to pay in cash, but payment through bank is safe both for employee & employer.
From India, Mumbai
From India, Mumbai
Dear Prabhat,
Sir, may I know on what basis you say that there is nothing wrong in paying salary by cash. Do you have any thing contrary to what I said?
I have given the provisions as applicable in Maharashtra under the POW Act.
I have given the provisions under Income Tax Act.
Am I wrong in understanding any thing?
From India, Mumbai
Sir, may I know on what basis you say that there is nothing wrong in paying salary by cash. Do you have any thing contrary to what I said?
I have given the provisions as applicable in Maharashtra under the POW Act.
I have given the provisions under Income Tax Act.
Am I wrong in understanding any thing?
From India, Mumbai
Going by the presumption that his salary is above Rs.20000/-p.m. he is not covered under the PoW Act,1936. However the Amendment in 2017 these provisions have to be ensured as reproduced hereunder -
xxxx
"Further to amend the Payment of Wages Act, 1936.
BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as
follows:—
1. (1) This Act may be called the Payment of Wages (Amendment) Act, 2017.
(2) It shall be deemed to have come into force on the 28th day of December, 2016.
2. For section 6 of the Payment of Wages Act, 1936, the following section shall be
substituted, namely:—
"6. All wages shall be paid in current coin or currency notes or by cheque or by
crediting the wages in the bank account of the employee:
Provided that the appropriate Government may, by notification in the Official
Gazette, specify the industrial or other establishment, the employer of which shall pay
to every person employed in such industrial or other establishment, the wages only by
cheque or by crediting the wages in his bank account.".
xxxx
Apart from the above the compliance w.r.t.to IT Act limitations also is necessary -
The Central Board of Direct Taxes (CBDT) has amended the Income-tax Rules, 1962, to reduce the cash payment limit for payments made to a person in a day. The income tax rule 6DD which deals with cases and circumstances in which a payment or aggregate of payments exceeding Rs 20,000 may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, has been amended. The maximum amount for such cases under income tax rule 6DD stands at Rs 10,000 now.
The amended Income Tax rule 6DD says – “Cases and circumstances in which a payment or aggregate of payments exceeding Rs 10,000 may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed in rule 6ABBA.”;
The rule 6ABBA is deemed to have been inserted from the 1st day of September 2019, which mentions all digital or electronic mode of payments includes -
(a) Credit Card
(b) Debit Card
(c) Net Banking
(d) IMPS (Immediate Payment Service)
(e) UPI (Unified Payment Interface)
(f) RTGS (Real Time Gross Settlement)
(g) NEFT (National Electronic Funds Transfer), and
(h) BHIM (Bharat Interface for Money) Aadhaar Pay”
Central Board of Direct Taxes has made the rules to amend the Income-tax Rules, 1962, and the new rules may be called the Income-tax (3rd Amendment) Rules, 2020. In simple terms, payments other than through any electronic means i.e. in cash is restricted to Rs 10,000 per day, where ever it is applicable.
XXXX
From India, Bangalore
xxxx
"Further to amend the Payment of Wages Act, 1936.
BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as
follows:—
1. (1) This Act may be called the Payment of Wages (Amendment) Act, 2017.
(2) It shall be deemed to have come into force on the 28th day of December, 2016.
2. For section 6 of the Payment of Wages Act, 1936, the following section shall be
substituted, namely:—
"6. All wages shall be paid in current coin or currency notes or by cheque or by
crediting the wages in the bank account of the employee:
Provided that the appropriate Government may, by notification in the Official
Gazette, specify the industrial or other establishment, the employer of which shall pay
to every person employed in such industrial or other establishment, the wages only by
cheque or by crediting the wages in his bank account.".
xxxx
Apart from the above the compliance w.r.t.to IT Act limitations also is necessary -
The Central Board of Direct Taxes (CBDT) has amended the Income-tax Rules, 1962, to reduce the cash payment limit for payments made to a person in a day. The income tax rule 6DD which deals with cases and circumstances in which a payment or aggregate of payments exceeding Rs 20,000 may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, has been amended. The maximum amount for such cases under income tax rule 6DD stands at Rs 10,000 now.
The amended Income Tax rule 6DD says – “Cases and circumstances in which a payment or aggregate of payments exceeding Rs 10,000 may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed in rule 6ABBA.”;
The rule 6ABBA is deemed to have been inserted from the 1st day of September 2019, which mentions all digital or electronic mode of payments includes -
(a) Credit Card
(b) Debit Card
(c) Net Banking
(d) IMPS (Immediate Payment Service)
(e) UPI (Unified Payment Interface)
(f) RTGS (Real Time Gross Settlement)
(g) NEFT (National Electronic Funds Transfer), and
(h) BHIM (Bharat Interface for Money) Aadhaar Pay”
Central Board of Direct Taxes has made the rules to amend the Income-tax Rules, 1962, and the new rules may be called the Income-tax (3rd Amendment) Rules, 2020. In simple terms, payments other than through any electronic means i.e. in cash is restricted to Rs 10,000 per day, where ever it is applicable.
XXXX
From India, Bangalore
Prof. Kumar,
This means what I said stands correct.
If employee falls under POW Act then you can not pay him by cash. Maharashtra Government has come out with notification it seems to me from google search.
If the employee do not fall under POW Act then also you can not pay him by cash by virtue of provisions under I.Tax Act.
From India, Mumbai
This means what I said stands correct.
If employee falls under POW Act then you can not pay him by cash. Maharashtra Government has come out with notification it seems to me from google search.
If the employee do not fall under POW Act then also you can not pay him by cash by virtue of provisions under I.Tax Act.
From India, Mumbai
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.