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employees contribution to provident fund

vidhi shah (employee ca) (32 Points)

13 October 2010

Is there any notification or circular that if empolyer dnt pay employees contribution to provident fund before due date of relevant act but before 31st march of relevant financial year then he can get deduction?

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9 Replies

Bhavin Bhadra (Job) (174 Points)
Replied 13 October 2010

Dear Vidhi,

For the purpose of claiming deduction of any expenditure from income you need to see only income tax provisions.

For employee contribution deduction will be allowed only if it is paid before due date of filing of return.

Bhavin bhadra

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CA Navin Jain (MANAGER (FINANCE & ACCOUNTS)) (11768 Points)
Replied 13 October 2010

For employee contribution deduction will be allowed only if it is paid before due date of filing of return

Ajay Mishra (Company Secretary) (74337 Points)
Replied 13 October 2010

Please check the following link also:

https://taxguru.in/general-info/due-date-for-the-purpose-of-payment-of-provident-fund-contributions.html

Regards

CA bhargava (CA) (2017 Points)
Replied 13 October 2010

as per SEc 36(1)(va)

employee contribution can be allowed as deduction received by the employer only if deposited into the account with in the due date.

here due date is the payment due date is as per the PF act., not as per 139(1)

more over 43 b is for employer's contribution to be paid before the due date of filing of return.

SAI KRISHNA GHANTASALA (JOB) (202 Points)
Replied 13 October 2010

hi VIDHI ,

hmm Sec 36(1)(va) reads as follows:

1. Remittances must be made before the due date under the relevant Fund / act::

2. But in the case of Shri.Ganapathy Mills Co.Ltd 243 ITR 879 (Mad.) it is decided that the payment made even during the grace period allowed under the relevant act can be allowed as deduction in the hand of the employer.

And till date there is no notification stating that the employee contribution paid before the due of filing of return u/c 139(1) can also be allowed as deduction.

I think CBDT should ammend the provisions or atleast bring a notification to that extent allowing such payments made before due date.

Think Informative :-)

With Regards

KRISHNA . S. GHANTASALA

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C.A. LINESH PATIL (CA) (910 Points)
Replied 13 October 2010

first employee contribution is treated as income under section 2(24) and if it is paid within due date then deduction is allowed otherwise not.unlike employer contribution which gets deduction on actual payment basis under section 43B.

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 13 October 2010

Originally posted by : bhargava
	as per SEc 36(1)(va) employee contribution can be allowed as deduction received by the employer only if deposited into the account with in the due date. here due date is the payment due date is as per the PF act., not as per 139(1) more over 43 b is for employer's contribution to be paid before the due date of filing of return.

Yes, agreed.

For Employee's Contribution it is allowed only if paid before due date as per PF Act.

For Employer's Contbirution, it is allowed only if paid before filing return.

Ashish Kumar Bagri (Manager - Taxation) (25 Points)
Replied 18 October 2010

Regarding PF contribution, there is a lot of change. Firstly, PF contributions are of 2 types - Employee's and Employer's. Employer's contribution is governed by Section 43B of the Income Tax Act, 1961 and thus, it is allowable provided the same is remitted before the due date of filing of Return of Income. There was a lot of controversy on this subject till AY 2003-04 but now the issue is well settled after the Hon'ble SC's decision in CIT Vs Alom Extrusions [(2009) 319 ITR 306].

Regarding Employee's contribution, general understanding has been that the same has to be remitted by the due date provided in the EPF Act i.e. 20th of next month (including grace period of 5 days) otherwise it is treated as income by virtue of provisions of Section 2(24) r.w.s. 36(1)(va). However, in a judgement of the Hon'ble Karnataka High Court in the case of CIT and Anr Vs Sabari Enterprises [(2008) 298 ITR 141] and Hon'ble Delhi High Court in the case of CIT Vs AIMIL Limited [(2010) 321 ITR 508], it has been held that even employee's contribution to provident fund paid after the due date as per EPF Act but by the return filing date would be allowable.

Please go through the same and apply accordingly.

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Arti Sehgal (MBA) (27 Points)
Replied 07 April 2014

CPFC Notification - Employer PF contribution under section 6 is payable only on basic wages (which excludes HRA, Overtime Allowance, Bonus, Commission etc.), dearness allowance (which includes cash value of any food concession) and retaining allowance, if any.

Regards,

Arti