TAX

PF Employees Lability & Employers liability Where to disclose in Tax Audit?

1. Employees Contribution Clause 20 and
2. Employers Contribution Clause 26
Dear All,
Very well said by ICAI president CA. M. Devaraja Reddy (in May 2016 journal) Let us
think big and consolidate our skills, energies and strengths to become bigger and
better.
This article had been presented before you all with an intention to provide clarity in
relation to correct disclosure in Tax Audit regarding Clause number for Provident Fund
contribution and Due date to be mentioned in those clauses.
PF liability has been bifurcated between 2 heads:
1. Employees contribution to PF and
2. Employers Contribution to PF.
Assesse (here an Organisation) has to credit Employees contribution to government
on or before the specified due date i.e. on 15Th of following month.(Grace period of 5
Days
have
been
removed http://taxguru.in/corporate-law/employers-pay-pfcontributions-15th-grace-period-removed.html
Disclosure Summary is as follows:
1. Employees contribution Same will be shown under Clause Due date will be
15th of Following month. Relevant Section in regards to the same is 36(1)(va) of IT
Act 1961 (Explained below).
2. Employers Contribution Clause 26 Section 43B Due date for the same
will be actual date of payment since deduction for the same will be allowed on
the basis of actual payment. Deduction for the same will be allowed if the
payment has been made on or before filling of due date.
Income Tax Section Reference:
Employees Contribution Section 36(1)(va) any sum received by the assesseefrom
any of his employees to which the provisions of sub-clause (x) of clause (24) of section
2 apply, if such sum is credited by the assessee to the employees account in the
relevant fund or funds on or before the due date.

Explanation.For the purposes of this clause, due date means the date by which the
assessee is required as an employer to credit an employees contribution to the
employees account in the relevant fund under any Act, rule, order or notification issued
thereunder or under any standing order, award, contract of service or otherwise;
Hence reading section 36(1 )(va) and its explanation it is clear that this section covers
only Employees contribution and also due date in relation to the Employees
Contribution will be the date by which assesse is required to credit employees
contribution i.e. on or before 15th of Following Month.
Employers Contribution Section 43B Notwithstanding anything contained in any
other provision of this Act, a deduction otherwise allowable under this Act in respect of
(a)
(b) any sum payable by the assessee as an employer by way of contribution to
anyprovident fund or superannuation fund or gratuity fund or any other fund for
the welfare of employees, or
(c) to (e).
shall be allowed (irrespective of the previous year in which the liability to pay such sum
was incurred by the assessee according to the method of accounting regularly
employed by him) only in computing the income referred to in section 28 of
that previous year in which such sum is actually paid by him.
Hence reading section 43B(b) it is clear that this section covers only Employers
contribution and also due dated in relation to the Employers Contribution will be the
date on which Assessee makes contribution to the account i.e. actual date of paymen