Quick Summary
The Supreme Court observed that employers have to deposit the employees contribution towards EPF/ESI on or before the due date for availing deduction under Sections 36(1)(va) and 43B of the Income Tax Act, 1961. The court observed that there is a marked distinction between the nature and character of the two amounts viz. the employers contribution and employees contribution required to be deposited by the employer. The first one is the employers liability is to be paid out of its income where
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FAQ :
The Supreme Court ruled that employers must deposit employee contributions towards EPF/ESI by the due date to claim tax deductions under Sections 36(1)(va) and 43B of the Income Tax Act.
Employee contributions are considered held in trust by the employer and are only allowed as a deduction if deposited by the specific due date mandated by the relevant welfare enactments.
Employer contributions are a liability paid from the employer's income, whereas employee contributions are deducted from employee wages, deemed income for the employer, and must be deposited by the due date.
No, the Supreme Court clarified that the non-obstante clause in Section 43B does not absolve employers from the obligation to deposit employee contributions by the due date as a condition for deduction.
The Kerala High Court ruled in favour of the revenue, while the Bombay, Himachal Pradesh, Calcutta, Guwahati, and Delhi High Courts favoured interpretations beneficial to assessees.
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