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EPF Late Payment

anand maru (22 Points)

13 September 2019

whose contribution disallowed if EPF or ESI payment is late???

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4 Replies

(Guest)

Employer contribution is disallowed while calculating employer's income from PGBP

Kapadia Pravin (17249 Points)
Replied 13 September 2019

@ Anand

Whose return you are talking about ?
Employer's Return OR Employee's Return

Dilip Bhandarkar (Student) (55 Points)
Replied 13 September 2019

If you are the employer, then you have to file the PF/ESI return and make payment before the due date of PF/ESI act i.e 15th of succeeding month. If you have not paid within the due date, then the EMPLOYEES CONTRIBUTION will be disallowed u/s 36(1) of the IT Act.
If you are referring to 43B disallowance i.e certain provisions allowable as expense only on payment before the due date to file ITR or Date of Filing return whichever is earlier (March Month outstanding), then EMPLOYERS CONTRIBUTION shall be disallowed u/s 43B.

Suresh Thiyagarajan (Student) (3986 Points)
Replied 14 September 2019

1. Two contributions are there with respect to EPF. Employers and Employee's contirbution.
2. With respect to Employee's contribution it will be allowed as deduction while computing the income of the Employer u/s 36(1)(va) only if the same is deposited within due date specified under the act. Due date for depositing employee's contribution will be within 15th of next month.
3. Hence, in order to avail the deduction u/s 36(1)(va) amount received from employee towards EPF should have been deposited within 15th of the succeeding month. If not, no deduction will be allowed u/s 36(1)(va) even if the payment is made after that date.
4. With respect to employer's contribution it is dealt under sec 43B which says that it should have been paid on or before filing the ROI. So if an employer pays his contirbution even before filing the ROI relating to that FY, he can still claim the deduction.
5. The distinction is an employee's contribution will be disallowed if failed to pay within 15th of next month from the date of collection. Employers contribution will be allowed only on an actual payment basis ( as per sec 43B) and even it means paying after 15th of next month.
Please correct me if the above solution has an alternative view.