Petty Cash Book in Excel
Last updated: 27 June 2026
A petty cash book records small day-to-day expenses — postage, conveyance, tea — that are too minor for the main cash book. The imprest system keeps the float fixed and predictable, and a columnar Excel layout lets you analyse expenses by category and track Section 40A(3) cash limits without any extra software.
Key takeaways
- A petty cash book is a subsidiary cash book for minor daily expenses, kept separate from your main cash book.
- The imprest system fixes a float (e.g., ₹5,000); you reimburse exactly the amount spent at the end of each week or fortnight to restore it.
- The standard Indian columnar format has separate columns for Postage, Stationery, Conveyance, Office Expenses, and Sundry.
- A simple running-balance formula (
=Previous Balance + Receipt - Total Payment) tracks the float automatically. - Section 40A(3) disallows cash payments exceeding ₹10,000 to a single person in a single day as a tax deduction — your petty cash book is your evidence.
- Add a Payee column and use SUMIFS to auto-flag any single-payee daily total that breaches ₹10,000.
- GST-registered businesses should add a GST column to capture input tax credit on eligible petty expenses.
What is a petty cash book, and how is it different from the main cash book?
The main cash book records all significant receipts and payments through a business's bank or primary cash chest. The petty cash book sits alongside it as a subsidiary record — it covers small, frequent expenses that would clutter the main book. A peon buying postage stamps, a driver claiming bus fare, or the office buying a pen refill all go into the petty cash book.
The petty cashier maintains it independently. At the end of the period they hand over vouchers and a summary to the accountant, who makes a single journal entry in the main books rather than dozens of small ones. This division of duty also acts as a basic internal control.
What are the two petty cash systems?
Simple system
The petty cashier is given a lump sum. When it runs out, they request more. The top-up amount varies each time, making budgeting and reconciliation harder.
Imprest system
A fixed float is set at the start (e.g., ₹5,000). The cashier pays expenses from it. At the end of the week or fortnight, the accountant calculates the total spent and reimburses exactly that amount — restoring the float to ₹5,000. The float never grows or shrinks unintentionally.
Indian SMBs should use the imprest system. It keeps the float predictable, simplifies the reimbursement journal entry, and makes it easy to verify that cash in hand plus vouchers always equals the fixed float.
Fact box. The imprest system gives you a built-in cross-check at any point in time: Cash in hand + Voucher total = Fixed float. If the numbers do not match, a discrepancy has occurred. This makes the petty cashier accountable without requiring constant oversight.
How do I set up a columnar petty cash book in Excel?
The standard Indian format uses analysis columns so totals can be posted directly to the correct expense heads in the ledger.
Step 1 — Create the column headers
| Column | Header | Notes |
|---|---|---|
| A | Date | DD-MMM-YYYY format |
| B | Voucher No | Sequential per financial year |
| C | Particulars | Brief description of expense |
| D | Payee | Name of vendor or person paid |
| E | Receipt (Imprest) | Amount received from main cash |
| F | Total Payment | Amount paid out |
| G | Postage & Courier | Analysis column |
| H | Stationery | Analysis column |
| I | Conveyance | Analysis column |
| J | Office Expenses | Analysis column |
| K | Sundry | Analysis column |
| L | GST | If GST-registered (see below) |
| M | Running Balance | Calculated by formula |
Step 2 — Enter the opening float
In row 2, enter the fixed float amount in column E (Receipt) and the same amount in column M (Running Balance). Leave all payment columns blank.
Step 3 — Record each payment
For each expense, enter the date, voucher number, particulars, payee name, and the amount in column F (Total Payment). Enter the same amount in exactly one analysis column (G through K). Do not split one payment across analysis columns unless you are recording a single voucher that covers two categories — in that case enter the breakdown in the analysis columns but ensure they sum to the Total Payment column.
Step 4 — Add the running balance formula
In M3, enter:
=M2+E3-F3
Copy this formula down the entire sheet. The balance will decrease with each payment and jump back up when a reimbursement receipt is entered in column E.
Step 5 — Totalise analysis columns
At the bottom of the sheet, sum each analysis column:
=SUM(G2:G500)
Repeat for columns H through K. The sum of G through K (plus GST if applicable) must equal the sum of column F. This cross-cast confirms that every payment has been allocated to an analysis head.
Step 6 — Post the reimbursement
At the end of the period, add a row with only a receipt entry equal to the total of column F for the period. This restores the float. The journal entry in the main books:
| Debit | Credit |
|---|---|
| Postage & Courier A/c | Cash / Bank A/c |
| Stationery A/c | |
| Conveyance A/c | |
| Office Expenses A/c | |
| Sundry Expenses A/c |
How do I track Section 40A(3) limits in the petty cash book?
Fact box. Section 40A(3) of the Income Tax Act: if a business makes a cash payment exceeding ₹10,000 to a single person in a single day, that expense is disallowed as a deduction when computing taxable income. The petty cash book — with individual vouchers — is your primary evidence that payments were kept below this threshold.
Petty cash payments are usually well below ₹10,000, but situations arise where a vendor collects multiple small amounts in one day, or a single invoice for repairs or supplies is paid in cash. A breach can go unnoticed without a check.
Add a helper column (column N) with this SUMIFS formula to flag any row where the cumulative payments to the same payee on the same date exceed ₹10,000:
=SUMIFS(F:F, D:D, D2, A:A, A2)
Apply conditional formatting to column N: highlight the cell red if the value exceeds 10000. This gives the accountant a visual alert before the period is closed.
Keep the underlying vouchers for every petty cash payment. Section 40A(3) scrutiny can arise during assessment, and having a numbered voucher matched to each book entry is the cleanest defence. A cash receipt above ₹5,000 attracts a ₹1 revenue stamp under the Indian Stamp Act; small petty-cash vouchers are usually below that limit, but check your state's current stamp rules if in doubt.
How do I handle GST on petty expenses?
If your business is GST-registered, some petty expenses carry input tax credit (ITC):
| Expense type | Typical GST rate | ITC claimable? |
|---|---|---|
| Stationery | 18% | Yes, if used for business |
| Postage (India Post) | Nil | No |
| Courier services | 18% | Yes, if GST invoice obtained |
| Local conveyance (auto/bus) | Nil | No |
| Taxi/cab (app-based) | 5% | Generally No (passenger transport) |
| Office repairs (labour + material) | 18% | Yes, if invoice in firm's name |
Add a GST column (column L) and record the GST component of each payment separately from the base amount. At the end of the period, the GST total goes to the ITC register, not to the expense journal entry. Only claim ITC on expenses where you hold a valid tax invoice in the business's name with GSTIN. Where a single repair invoice combines labour and material, ITC is generally available on the whole invoice if the supplier has charged GST and the expense is for business use — confirm the supplier's invoice shows a valid GSTIN and tax breakup.
Frequently asked questions
What is a good petty cash float for a small business? The float should cover roughly two weeks of typical small expenditures without frequent top-ups. Most Indian micro-businesses operate comfortably with a float of around ₹3,000–₹10,000. Review the float amount every quarter and revise it if the petty cashier is running out before the replenishment date.
What vouchers are needed for petty cash payments? Each payment requires a petty cash voucher — a pre-printed or typed slip showing the date, amount, purpose, and signature of the person receiving the cash. The recipient should also attach any external bill or receipt. Number vouchers sequentially and retain them for at least six years, which aligns with the usual income-tax record-keeping window; companies must keep books for eight years under Section 128 of the Companies Act 2013.
How does petty cash appear in the balance sheet? The petty cash float is a current asset. It appears under "Cash and Cash Equivalents" alongside the main cash balance and bank balances. At month end, the balance in column M of your petty cash book is the figure to carry into the balance sheet.
Can I use the same Excel file for multiple months? Yes. The simplest approach is a new worksheet tab for each month, named "Apr-26", "May-26", and so on. Carry the closing balance from the last row of the previous sheet as the opening balance on the first row of the new sheet. Keep all tabs in one workbook so SUMIF totals across sheets remain straightforward.
What is the journal entry when petty cash is replenished? Debit each expense category account for its column total, and credit the Cash or Bank account for the total reimbursement. The petty cash account itself is not debited or credited during replenishment under the imprest system — the float stays constant.
Does petty cash need to be audited? Formal statutory audit requirements depend on the business type and turnover. However, any internal audit or CA review will typically verify the petty cash book by physical cash count against the book balance and voucher check. Keeping vouchers in a numbered file alongside the Excel book makes this quick.
Sources and disclaimer
- Income Tax Act 1961, Section 40A(3) — cash payment disallowance
- CBDT Circulars on Section 40A(3) applicability
- GST Council rate schedules (as applicable to stationery, courier, and repair services)
- Standard Indian accounting practice for columnar petty cash books (ICAI guidance)
This article is for general information only and does not constitute legal, tax, or professional accounting advice. Tax provisions and GST rates change; verify current figures with a qualified CA or tax advisor before filing or making compliance decisions.
How Ankeshan helps
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