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Yes, cash payments are harder to prove and are often treated as a red flag. Bank payments are strong evidence that tax was paid to the supplier.
GST
Purchases paid in cash from a suspect supplier
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Provisions
Sec 155, CGST Act 2017; Sec 16(2), CGST Act 2017
Analysis
For cash bills, collect receipts signed by the supplier, cash book entries, and proof of goods movement and use. Separate cash invoices from bank-paid ones in your reply, so the stronger ones are not mixed with weak ones. Income-tax rules also limit cash payments, so check that side too. Going forward, pay suppliers through bank only.
Close
- List cash-paid invoices separately.
- Collect receipts, cash book and movement proof for them.
- Present bank-paid invoices as the core of your defence.
- Pay all suppliers by bank in future.
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General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.