Consequence of deduction of pf after the due date

As per IT Act, sum received by the assessee from its employees as PF contributions are deemed as his income u/s 2(24). Such income is eligible for deduction u/s 36(1)(va) only if the assessee company credits the same to relevant fund within due date of that Act.

It implies, if employer deducts PF contributions, then he is supposed to deposit the same by 15th of the month following the month for which the contribution is due. 5-days grace is allowed, in the sense, upto 20th of following month. If he can pay within 20th, then deduction under business head as per IT Act is available. If he pays beyond such date, then he looses the deduction under IT Act. Same applies to ESI, if payment made beyond the date as specified by ESI Act. If respective contributions are not made to respective accounts of employees within due date, then it will be treated as employers income. Others please correct me if i am wrong.

emplyee's share of contribution which is deducted from salary/wages would be added to income in compuation of total income.

CA.Vipan Chopra