Employee expenses
This query is : Resolved
12 May 2026
Company formed private employee fund.
For this purpose company yearly deduct certain amount from employee salary & company add his double contribution ( double of employee contribution ) in welfare fund.
Can we claim company's ( employer ) contribution as expenses in profit and loss account as per income tax act. Also what is the implication regarding gst
For this purpose company yearly deduct certain amount from employee salary & company add his double contribution ( double of employee contribution ) in welfare fund.
Can we claim company's ( employer ) contribution as expenses in profit and loss account as per income tax act. Also what is the implication regarding gst
12 May 2026
Income Tax: The employer's contribution to an unrecognized private welfare fund is generally disallowed as a business expense under Section 40A(9).
GST: No GST is applicable on the transfer of funds, but the company cannot claim Input Tax Credit on expenses related to such a fund.
Employee: The amount will be taxed in the employee's hands at the time of payment/withdrawal rather than at the time of contribution.
GST: No GST is applicable on the transfer of funds, but the company cannot claim Input Tax Credit on expenses related to such a fund.
Employee: The amount will be taxed in the employee's hands at the time of payment/withdrawal rather than at the time of contribution.
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