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Sec 40(a)

CA SUKSHAM ARORA (CA) (569 Points)

04 November 2014

DEAR MEMBERS,

CAN ANYONE PLEASE TELL ME THE MEANING OF THIS CLAUSE U/S 40(a) OF THE INCOME TX ACT, 1961:

"any payment to a provident or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source from any payments made from the fund which are chargeable to tax under the head “Salaries”"

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6 Replies

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 04 November 2014

Generally, Salaries and Contribution to Provident and ESI funds are booked under seperate heads in P&L A/c. If payment of salary to employee attract T.D.S provisions, you need to deduct T.D.S on salary considering your (Employer) contribution to employee welfare funds. If you fail to consider those contributions you will be disallowed to that extent of contribution while computing your Income tax liability.

CA SUKSHAM ARORA (CA) (569 Points)
Replied 05 November 2014

Dear Members,

WANT MORE VIEWS...................

apeksha (proprietor) (21 Points)
Replied 06 November 2014

By adding this provision, they are just trying to say that whatever type of amount u r paying for the benefit of the employee.. You have to have deduct tax..unless employee himself has not done anything which will make that amount tax free..

Manish Mehta (Manger) (115 Points)
Replied 06 November 2014

I believe here assesse should see availability of Tan number with the organisation with whom contribution is being made and shall obtain copy of the Tan number before contribution made.

Manish Mehta (Manger) (115 Points)
Replied 06 November 2014

I believe here assesse should see availability of Tan number with the organisation with whom contribution is being made and shall obtain copy of the Tan number before contribution made.

Mihir (Wealth Manager) (5293 Points)
Replied 06 November 2014

I think it means that when the employer is making payment to a fund for the benefit of the employees, TDS will be deducted from payment made by the fund to the employees and the same shall be chargeable to tax under the head salaries.