Section 36(1)(VA) of the Income Tax Act, 1961 allows a deduction to an employer for the amount of contribution received from its employees towards any provident fund, superannuation fund, Employees’ State Insurance (ESI) fund, or any other fund for the welfare of such employees, if the amount is credited to the employee’s account in the relevant fund on or before the due date.

The due date for crediting the amount to the employee’s account is the same as the due date for depositing the employer’s contribution to the fund, which is usually on or before the 15th of the month following the month in which the contribution is received.

The deduction under section income tax 36(1) (VA) is available only if the fund is a recognized provident fund, approved superannuation fund, or an ESI fund. It is also available for contributions to any other fund for the welfare of employees, but only if the fund is approved by the Commissioner of Income Tax.

The deduction under section 36 under income tax(1) (VA) is limited to the amount of contribution actually received by the employer from its employees. It is not available for any amount that is merely deducted from the employees’ salaries but not actually paid to the fund.

The deduction under section income tax 36(1) (VA) is a valuable tax saving opportunity for employers. It can help to reduce the overall tax liability of the employer, and can also be used to attract and retain employees.

Here are some important points to note about section 36(1) (VA):

• The deduction is available only for contributions received from employees.
• The contribution must be credited to the employee’s account in the relevant fund on or before the due date.
• The fund must be a recognized provident fund, approved superannuation fund, ESI fund, or another fund approved by the Commissioner of Income Tax.
• The deduction is limited to the amount of contribution actually received by the employer from its employees.

FAQ QUESTIONS

What is section 36(1) (VA)?

Section 36(1) (VA) of the Income Tax Act allows a deduction to an employer for any sum received by him from his employees as contribution to any welfare fund for the benefit of such employees, if the sum is deposited in the employee’s account in the relevant fund on or before the due date.

• What are the requirements for claiming a deduction under section income tax36(1) (VA)?
• The following requirements must be met in order to claim a deduction under section income tax36(1) (VA):
•  The sum must be received by the employer from his employees as a contribution to income tax any welfare fund for the benefit of such employees.
• The sum must be deposited in the income tax employee’s account in the relevant fund on or before the due date.
• The fund must be a recognized welfare fund.
• What are the due dates for depositing the contributions?
• The due dates for depositing the contributions vary depending on the income tax type of welfare fund. For example, the due date for depositing contributions to a provident fund is the 15th of the following month.
• What happens if the contributions are not deposited on time?
• If the contributions are not deposited on time, the employer will be liable to pay interest on income tax the amount outstanding. Additionally, the amount will be deemed to be income of the employer and will be taxed accordingly.
• What are some examples of welfare funds?
• Some examples of welfare funds include:
• Provident funds

* Superannuation funds

* Gratuity funds

* ESIC funds

* Health insurance funds

* Recreation funds

* Education funds

• Can I claim a deduction for contributions made to a non-recognized welfare fund under income tax?

No, you cannot claim a deduction for contributions made to a non-recognized welfare fund. A recognized welfare fund is a fund that has been approved by the government.

• What are the documents I need to keep in order to claim a deduction under section incometax36(1) (VA)?

You need to keep the following documents in order to claim a deduction under income tax section 36(1) (VA):

* Proof of the contributions made by the employees

* Proof of the deposit of the contributions in the relevant fund

* A certificate from the fund manager stating that the fund is a recognized welfare fund

CASE LAWS

• Adani Power Limited v. Commissioner of Income Tax, Ahmedabad (2014) 368 ITR 24 (GU.): The Gujarat High Court held that the deduction under section 36(1) (VA)income tax is available only if the amount received from the employees is credited to their account in the welfare fund on or before the due date. In this case, the assesses had received the employees’ contribution after the due date, and therefore, the deduction under income tax was not allowed.
• CIT v. NTPC Limited (2015) 378 ITR 194 (Del.): The Delhi High Court held that the deduction under section income tax 36(1)(VA) is not available if the amount received from the employees is not actually paid to the welfare fund. In this case, the assesses had received the employees’ contribution, but had not yet paid it to the welfare fund. Therefore, the deduction of income tax was not allowed.
• CIT v. Bharat Heavy Electricals Limited (2016) 386 ITR 532 (Cal.): The Calcutta High Court held that the deduction under section income tax 36(1)(VA) is available even if the amount received from the employees income tax is credited to their account in the welfare fund after the due date, as long as it is paid to the welfare fund on or before the due date. In this case, the assesses had received the employees’ contribution after the due date, but had paid it to the welfare fund on or before the due date. Therefore, the deduction income tax was allowed.