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Section 43B Deductions Based Actual Payments

Section 43B Deductions Based Actual Payments

Section 43B will be applicable only if incomes are chargeable to tax under section 28 i.e. under the head profits and gains from business or profession.

Section 43B says that Notwithstanding anything contained in any other provision of this Act, a deduction other- wise allowable under this Act in respect of

(1) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or

(2) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees,

(3)any sum payable by the assessee as interest on any loan or borrowing from any public finan­cial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing;

(4) any sum payable as bonus or commission to employee for services rendered

(5)any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advanc­es

(6) any sum payable by the assessee as an employer in lieu of any leave at the credit of his em­ployees.

As per this provision any amount of tax , duty , cess is allowed as deduction for computing business income they should be paid on or before the date specified by the relevant laws.

Employer’s contributions towards ”Provident fund” is allowed as deduction when it is paid to the authorities before filing the return of income.

But the deduction towards employees contribution of PF is allowed only when it is paid within the due date specified under Employees Provident fund Act.

Deduction of Gratuity available if paid before filing of return of Income. 

Circular 496 dated 25/09/1987 and 674 dated 29.12.1993 says that

1.Where the State Governments make an amendment in the Sales-tax Act to the effect that the sales tax deferred under the scheme shall be treated as actually paid, the statutory liability shall be treated as discharged for the purposes of section 43B.

2.Where the State Governments, instead of amending the Sales-tax Act, have issued Government Orders notifying schemes under which sales tax is deemed to have been actually collected and disbursed as loans then such sales tax liability as converted into loan will have similar statutory effect as can be achieved through amendments of the Sales-tax Act.

Section 43B Deductions Based Actual Payments 

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