Late Payment of employee's share of PF & ESI

ITR 4448 views 2 replies

a) Employee's Contribution for Provident fund amounted to Rs.981008.00 for Apr'2008 to Mar'2009 paid on 09/07/2009 and b) Employee's Contribution for ESI amounted to Rs.16419.00 (Rs.7642.00 for May'2008 and Rs.8777.00 for Oct'2008) paid on 27/06/2008 & 24/12/2008 will be disallowed u/s 43(b).  Do we have to consider both in deferred Tax Calculations.

 

 

Replies (2)

 Section 36(1)(va) of IT Act provides that if employer has deducted from employees salary his contribution for PF or ESIC, it is FIRST TREATED AS INCOME of employer. It is allowed as deduction only when it is paid ON OR BEFORE DUE DATE provided in PF Act. Hence, here sec 43b not applies for employee's contribution. So it will never be allowed as deduction in future.

 

Sec 43B applies only to the extent of employer's contribution. You can get deduction only when you have actually paid it.

Employees contribution shall not be allowed as deduction if it is paid after due date under respective laws. ( sec 2(24)(x) r/w 36(1)(vi) )

 sec 43B  applies only to employer's contribution and hence it is a permanent difference and hence Deffered tax never comes into picture 


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