Partner - Risk Management
Senior Hr Executive
Statutory Complaince/labour & Employment
Hr Professional
+4 Others

Dear Sir/Madams,
Is there any Act/Law vide Finance Ministry or any other Governmental Agency, whereby Salary payment (regular permanent employees of a mfg co.) can be made mandatory through Bank Payment only ?
Is there any case in any court of law related to the above subject ?
Quoting The Payment of Wages Act, 1936
6. Wages to be paid in current coin or currency notes - All wages shall be paid in current coin or currency notes or in both
5* [Provided that the employer may, after obtaining the written authorisation of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account.]
Thanks & Regards
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Hello Jay,
As per my opinion
Please refer IT act section 40A(3), as per act cash expenditure is not allowed ore than 20,000 we needs to drawn the salary through cheque only if payment is more than 20,000 Rs.
Below that we can give cash.
Thanking you,
Dear Mr. Jay, Kindly go through the section (6) of the Payment of Wages - Amended, attached herewith. Hope this will help you. Cheers.

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File Type: pdf Payment of Wages Act - Amended.pdf (118.3 KB, 3431 views)

Dear Bhuwan C Arya,
I did not find any change in the contents of Sl.6 even in the amended act.
BTW the CM of WB had informed that all state govt salary payments will be made through Bank. Is there any Government notification in this regards.
Dear Asish, I am aware of the section as per the IT Act but I am surprised that even the court did not do anything to enforce this. There is a court case pending since 2004. Hasnt come up for final hearing as yet.
Thanks & Regards
Dear Jay,
I think your attention slipped from it. The Section (6) is as follows:
6. Wages to be paid in current coin or currency notes -
All wages shall be paid in current coin or currency notes or in both : [Provided that the employer may, after obtaining the written authorization of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account].
Thanks Bhuwan. Some employees (around 66 of them) in my organisation want salary in cash only. This is creating problems. There is a legal case pending since 2004 with some of the employees who wanted payment only through cash whilst the company wanted 100% Bank payment only. The law is archiac and needs modification.
The Act says that it is upto the employee to take salary in whichever way (cash or cheque or bank payment) he wants to. If its through cheque or through Bank, then a written authorization is needed from the employee. We want to disburse salary only through Bank.
Thanks & Regards
Maharashtra is the first state in India that has ammended the POW Act making it mandatory to pay wages and salary above rs. 3000 per month through bank transfers or crossed cheques. In Maharashtra, there is no choice on this.
Gujarat is likely to be the second state to do the same.
Other states may do so also, but till then, the payment can be made only with approval of the employees. So a standard procedure is to get the same signed by the employees when the join and to (if possible), ammend the standing orders to include payment of salary only through bank.
The disallowance on payment of more than 30,000 in cash under the income tax act does not cover salary. There are exemptions for payment made in cash under any other law.
please make it clear all most all States have amended Payment of Wages Rules, which make mandatory to pay salary through cheque or Bank transfer only, not in cash. google you will get cicular/notification of states, Maharasthra, Delhi, Haryana, Madhya Pradesh, Karnataka etc all have issued such notificaiton.
Hi For some reason, i am not able to find any notification on compulsory bank transferes through google except for maharashtra. Would appreciate if you can give me a link for delhi and karnataka
Dear Sir,
We are some employee working in XYZ company & working here from last 1 and half yers. But from last 3 months our salary is due from companys side. In this regard we face so many problem in our daily. In this situation what step we can take as per you openion.Please help me in this situation.
We Have more than 100 labours who don't have either salary accounts or personal bank Accounts. is there any grace period provision for disbursement of salary in this case, as it has become compulsory to disburse the salary by bank accounts only?
Go to any of the PSU banks and they will open Jan dhan accounts in a single day
Dear Sir,
Is it mandatory today to pay salary/wages through bankers check or electronic (i.e. NEFT, RTGS, etc...) not in or by cash.
please provide if there is any circular, notifications available.
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