What is 43B in an Indian Taxation?
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Answer / r.sivaraman
Under Sec 43B of Indian Income Tax Act, 1965
express "Certain deductions to be only on actual payment"
(a) any sum payable by the assessee by way of tax11a, duty,
cess or fee, by whatever name called, under any law for the
time being in force, or
(b) 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, or
(c) any sum referred to in clause (ii) of sub-section (1)
of section 36,or
(d) 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
(e) 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 or
(f) any sum payable by the assessee as an employer in lieu
of any leave at the credit of his employee,
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
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Broadly section 43B of Income Tax Act 1961 entails ‘Deductions only on Actual Payments’.
While computing income under the head Profits and gains of business or profession (PGBP), some of the expenses are allowed and can be claimed by the assessee only in the year in which the payment is actually made. This is irrespective of the previous year in which the liability to pay such sum was incurred by the assessee. Section 43B overrides all the sections in Income Tax Act, 1961.
Allowed under this section:
a) tax, duty, cess or fee, (by whatever name called, under any law for the time being in force);
b) contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees;
c) bonus or commission to employee for services rendered
d) 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;
e) interest on any loan or advances from a scheduled bank or (wef A.Y 2018-19 from a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank) in accordance with the terms and conditions of the agreement governing such loan or advances
f) in lieu of any leave at the credit of his employee.
g) to Indian Railways for the use of railway Assets (wef A.y 2017-18)-Section 43B to include certain payments made to Railways
Exception- When deductible on accrual basis
The exception is applicable if the following three conditions are satisfied:
1. Assessee keeps books of accounts on mercantile basis
2. Payment in respect of aforesaid expenses is actually made on or before the due date of submission of return of income under sec 139(1)
3. The evidence of such payment is submitted along with return of income. However no annexure is possible with the new ITR forms. Such evidence should be maintained by the assessee and produced to Assessing officer as and when needed.
For further clarification, mail to cavkss@gmail.com
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