Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Cash is a reporting focus
A key purpose of Form 3CD is to surface cash dealings the law discourages. The auditor must report: cash expenses over ₹10,000 to a person in a day (disallowed under Section 40A(3)); cash loans or deposits of ₹20,000 or more taken or repaid (Sections 269SS/269T); and cash receipts of ₹2 lakh or more from a person (Section 269ST).
The consequences
These aren’t just disclosures — 40A(3) disallows the cash expense (adding to taxable income), and 269SS/269T/269ST breaches carry penalties equal to the amount involved. So the audit report effectively hands the department a list of your cash issues. Confirm the current thresholds per the Finance Act.
A worked example
Example: a business paid a supplier ₹30,000 in cash in a day and accepted a ₹3 lakh cash advance from a customer. The auditor reports the ₹30,000 as a 40A(3) disallowance and flags the ₹3 lakh under 269ST — exposing a penalty. Routing payments and receipts through the bank avoids all of this. Our team can review your cash practices before the audit.