Section 40A(7) vs Section 43B

I have disallowed provision for Gratuity towards unapproved fund under section 40A(7). Suppose next year the employee retires & actual payment is made to him, under which section the actual payment will be allowed?

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Quick Summary
This discussion clarifies the tax treatment of gratuity provisions and actual payments. While provisions for unapproved gratuity funds are disallowed under Section 40A(7), the actual payment made upon employee retirement can be claimed as a deduction. The deduction for the actual payment is typically claimed under Section 37, often as 'any other allowance' in the Income Tax Return, as there isn't a specific field for Section 40A(7) allowance.

Under sec 37.. in ITR deduction to be claimed under "any other allowance" as only disallowance can be claimed under 40A(7).. there is no field in ITR for claiming allowance under Sec 40A(7)

I totally agree with what you have said!! upmusics

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