As per the section 43B of Income Tax Act, 1961 taxpayee Employee can get benefit of Exemption of Employee's contribution even if paid after due date of fund but before due date of filing Income Tax Return under the head Profits and gains of business or profession.
Section 43B
Deduction allowed on actual payment:
Notwithstanding anything contained in any other provisions of the income-tax Act, in respect of certain expenditure/payments, the deduction is allowed (irrespective of the previous year to which the liability to pay such sum was incurred by the assessee according to method of accounting regularly employed by him) only if the amount has been actually paid during the previous year. However, in case an assessee follows mercantile system of accounting, the payments mentioned below can be claimed on ̳due‘basis, provided the payment for the same is made within stipulated period mentioned against each expenditure:
Nature of Expense
Section 43B
Deduction allowed on actual payment:
Notwithstanding anything contained in any other provisions of the income-tax Act, in respect of certain expenditure/payments, the deduction is allowed (irrespective of the previous year to which the liability to pay such sum was incurred by the assessee according to method of accounting regularly employed by him) only if the amount has been actually paid during the previous year. However, in case an assessee follows mercantile system of accounting, the payments mentioned below can be claimed on ̳due‘basis, provided the payment for the same is made within stipulated period mentioned against each expenditure:
Nature of Expense
- Any sum payable by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force.
- Any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees.
- Any sum payable to an employee as bonus or commission for service rendered.
- Any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or State Financial Corporation or State Industrial Investment Corporation like IDBI, IFCI, UPSIDC, Delhi Financial Corporation, etc., in accordance with the terms and conditions of the agreement governing such loan or borrowing.
- Any sum payable by the assessee as interest or any loan or advance from scheduled bank in accordance with the terms and conditions of the agreement governing such loan.
- Any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee.
As amended by Finance Act, 2013
Presently, payment of interest on any loan/borrowing from a public financial institution, State Financial Corporation or State Industrial Development Corporation and interest on any loan/advance from a scheduled bank is allowed as a deduction from business income, when such interest is actually paid.
Provisions of Sec.43B are applicable only in respect of employers contribution to provident fund, ESI, etc. Employees contribution to provident fund, ESI, etc., shall be allowed as deduction only when the payment of the same is made on or before the due date mentioned under the respective welfare Acts. If the employer‘s contribution to such fund is paid after the due date under the respective Acts, the deduction for such payment made by the employer shall not be allowed under Sec. 36(1)(va).
Presently, payment of interest on any loan/borrowing from a public financial institution, State Financial Corporation or State Industrial Development Corporation and interest on any loan/advance from a scheduled bank is allowed as a deduction from business income, when such interest is actually paid.
Provisions of Sec.43B are applicable only in respect of employers contribution to provident fund, ESI, etc. Employees contribution to provident fund, ESI, etc., shall be allowed as deduction only when the payment of the same is made on or before the due date mentioned under the respective welfare Acts. If the employer‘s contribution to such fund is paid after the due date under the respective Acts, the deduction for such payment made by the employer shall not be allowed under Sec. 36(1)(va).
