Employee expenses

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This query is : Resolved

Rajkumar Gutti (Querist)
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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

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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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.

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