Confusion regarding disallowance of employees contribution to PF in the hands of employer

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Harshal Jain (Querist)
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28 June 2021 I recently analyzed section 43B of the Income Tax Act regarding allowing certain expenses on a payment basis. Point B of the same section is regarding the contribution by an employer to the welfare fund of employees. While it is clearly stated that the employer's contribution to PF would be allowed as a deduction only if it is paid on or before the due date of filing of IT returns by the employer, there is some confusion regarding the deducted part of the employee's salary. Section 36(1)(va) states that an employee's contribution to PF would be allowed as a deduction to the employer only if it is deposited before the due date of the relevant Act. Different high courts have different judgments on the same.

Can anyone clarify whether an employee's contribution to the PF would be allowed to the employer as per the provision of section 43B or section 36(1)(va)?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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29 June 2021 43 B is not applicable to employee's contribution. Pl see Explanation 2 to section 36(1)(va) introduced through the FA 2021.

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