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Section 43 B (Allowance Of Deduction on Payment Basis)

If the assessee follows mercantile system of accounting actual payment of expenditure during the P.Y is not the essential condition.However, following are the expenses which are necessarily required to be paid even if mercantile system of accounting is adopted.

(1) Bonus or Commission to employees.

(2) Any tax, duty etc.

(3) Salary in lieu of leave.

(4) Interest on loan payable to approved financial institutions and scheduled bank.

(5) Amount contributed by the employer towards recongnised P.F, approved Gratuity fund or any approved fund meant for benefit of employees.

The above mentioned expenses can be claimed as deduction while computing the business or professional income only when its payment is actually made by the assessee uptil the due date fixed for furnishing the return of income in the A.Y.

In case the payment is made by the assessee after the due date of furnishing the return of income.In such a case the deduction will be allowed to the assessee in the P.Y in which the payment is actually made by the assessee.

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