Due Date For Employer To Deposit Employee's Contribution To PF Not Governed By S.43B Income Tax Act: Rajasthan HC Reiterates
The Rajasthan High Court has reiterated that share of the employee in the provident fund deducted by the employer, has to be deposited as per the due date fixed by the EPF Act and ESI Act, and not as per Section 43B of the Income Tax Act, 1961.
The Scheme framed under Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) provides that employee's contribution shall be deposited with the Central government “within fifteen days of the close of every month”.
Similarly, the Scheme framed under the Employees' State Insurance Act, 1948 (ESI Act) states that an employer who is liable to pay contributions in respect of any employee shall pay those contributions “within 21 days of the last day of the calendar month in which the contributions fall due”.
Section 43B of the Income Tax Act governs employer's contribution and provides a deduction if the amount is paid “before the due date of filing the tax return”.
The High Court held this deadline is not applicable so far as the deposit of an employee's contribution is concerned.
The division bench of Justices Avneesh Jhingan and Ashutosh Kumar observed,
“There is no leeway with the assessee in depositing of amount of employee's contribution under EPF Act and ESI Act, beyond the due date as prescribed by the respective Act. It is only on the deposit in compliance with the provisions of the EPF Act and ESI Act, the retained amount is treated for deduction.”
It cited Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-1 (2022) where the Supreme Court had held that employers have to deposit the employee's contribution towards EPF/ESI on or before the relevant due date, under the respective Acts, for availing deduction under Section 43B of the Income Tax Act.
Accordingly, the Court disposed of Revenue's appeal in relation to assessment proceedings involving a State-owned electricity distribution company.
Appearance: Advocates Anuroop Singhi and Aditya Khandelwal for Appellant; Advocates Prakul Khurana and Rajat Sharma for Respondent
Case title: Principal Commissioner of Income Tax Jaipur -II v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd
Case no.: Income Tax Appeal No. 329/2018