23 April 2023
Deduction allowed on actual payment [Sec. 43B] Notwithstanding anything contained in any other provisions of the income-tax Act, in respect of certain expenditure/payments, the deduction is allowed (irrespective of the previous year to which the liability to pay such sum was incurred by the assessee according to method of accounting regularly employed by him) only if the amount has been actually paid during the previous year. However, in case an assessee follows mercantile system of accounting, the payments mentioned below can be claimed on ‘due’ basis, provided the payment for the same is made within stipulated period mentioned against each expenditure: Nature of Expense 1) Any sum payable by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force. 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 to an employee as bonus or commission for service rendered. 4) Any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or State Financial Corporation or State Industrial Investment Corporation like IDBI, IFCI, UPSIDC, Delhi Financial Corporation, etc., in accordance with the terms and conditions of the agreement governing such loan or borrowing. 5) Any sum payable by the assessee as interest or any loan or advance from scheduled bank in accordance with the terms and conditions of the agreement governing such loan. 6) Any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee.
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