Provision for Gratuity, Income Tax

[Bijay Shrestha]

Dear Friends,

When a company makes Provision for Gratuity, it is disallowed u/s 40A(7) of the IT Act 1961 and added back in IT computation.

But after that, if the Company makes payment of gratuity out of that provision in subsequent year, under which section its allowed as deduction in IT computation ?? under Section 43B or 40A(7) or 37 ??

A plain reading of Section 43B does not include Payment of Gratuity out of the Provision. It only includes Contribution to Gratuity Funds.

If we allow under 40A(7), there is no such column in IT Return to include such payment.

And Section 37 includes allowances of expenditures not covered by section 30 to 36.

Please suggest.
 

Posts / Replies

[MARIAPPAN GOVINDARAJAN]

Whether you have got clarified in this query? If not please inform.

[Bijay Shrestha]

No Sir.

But I think it should be allowed u/s 43B.