according to tax rule how much salary can be paid in cash kindly give reference also

Question

Kindly let me know as an AOP firm how much salary can be paid in cash.

Answer 1

The maximum salary that an AOP firm can pay in cash to an individual employee and still claim it as a tax deduction is thirty-two thousand rupees per month.

If the salary paid or payable exceeds thirty-two thousand rupees per month to an individual, the payment must be made by crossed cheque, direct transfer of funds to the employee’s bank account, or through digital means for the expense to be deductible when computing income under the head "Income from Business".

This restriction is stipulated in the law detailing expenses that are generally not allowed as a deduction in computing a person’s income, which includes an AOP.

Income Tax Ordinance, 2001 – Section 21(m) (Expenditures not allowed)

 Income Tax Rules, 2002 – Rule 69