Question And Answer
Subject: Whether employees contribution towards PF and ESIC paid after due date and before filing of return is allowable as deduction.?
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Date: May 15, 2021
Query asked by SUBRATA RAY

Whether employees contribution towards pf and esi paid after due date as precribed under the prescribed under the law is disallowable u/s 36 of the IT Act, 1961 though paid within due date of filing return as per S43B of the It Act 1961

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Answer given by

Note :
Memorandum explaining the provision states that this amendment will take effect from Ist April , 2021 and will , accordingly , apply in relation to the assessment year 2021 -22 and subsequent assessment years (2021) 430 ITR 214 (st) (243). In the case of CIT vs. Hindustan Organics Chemicals Ltd [2014] 366 ITR 1 (Bom.) (Para 9) held that where assessee company made payment of employees contribution towards provident fund, assessee’s claim could not be disallowed on account of delayed payment in view of amendment to section 43B. In CIT v. Vatika Township (2014) 367 ITR466 (SC) (Five Judges Bench) Levy of surcharge on block assessment years pertaining prior to ist June 2002 is held to be not valid. Court held that proviso to section 113 of the Income –tax Act, 1961, by the Finance Act, 2002, w.e.f 1-6 – 2002 , it is clearly a substantive provision and is to be construed as prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. The same principle should apply for interpretation of amendment to section 43B of the Act . However some of the CIT (A) have taken the view that the amendment is retrospective . We hope the Appellate Tribunal will decide the issue in due course of time .

Dr. K. Shivaram Senior Advocate


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One comment on “Whether employees contribution towards PF and ESIC paid after due date and before filing of return is allowable as deduction.?
  1. vijay says:

    yes, finance act has amended sec.36 of the income tax act and therefore even if pf,esic paid before income tax return due date

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