Cash limits, MSME payments and other disallowances
1 min read
Updated 03 Oct 2026
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AI summary
The cash rules and the MSME 45-day rule that cause the most disallowances in small businesses.
3 sections
Cash rules
| Rule | Limit | Effect |
|---|---|---|
| Cash expense to one person in a day (old 40A(3)) | More than ₹10,000 (₹35,000 for transporters) | Expense disallowed |
| Receiving cash (old 269ST) | ₹2 lakh or more from one person in a day, for one transaction or one event | Penalty equal to the amount |
| Taking a loan or deposit in cash (old 269SS) | ₹20,000 or more | Penalty equal to the amount |
| Repaying a loan or deposit in cash (old 269T) | ₹20,000 or more | Penalty equal to the amount |
| Capital asset bought in cash | Above ₹10,000 | Not added to cost for depreciation |
MSME payments (old 43B(h))
If you buy from a micro or small enterprise registered on Udyam, pay within the agreed credit period, and never later than 45 days (15 days if nothing is agreed). Unpaid amounts at year-end beyond this limit are disallowed and allowed only in the year you pay.
Statutory dues (old 43B)
GST, PF, ESI employer share, bonus, leave encashment and interest to banks are allowed only when paid (by the ITR due date for most items). Employees' PF/ESI share must reach the fund by the fund's own due date, or it is taxed as your income.
Hisab Central's AI Audit Log flags cash receipts of ₹2 lakh or more and cash expenses above ₹10,000 while you enter vouchers.
Sources
PreviousBooks of account and tax audit (sections 62 and 63) Next in Business Income & Audit Paying yourself from your business: drawings, remuneration, salary or dividend
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