ITAT Bars Late PF/ESIC Deductions, Follows Supreme

The Income Tax Appellate Tribunal (ITAT) has reinforced a strict stance on the disallowance of deductions for delayed payments of employee contributions to Provident Fund (PF) and Employee State Insurance (ESI). Following the precedent set by the Supreme Court in its landmark Checkmate Services Pvt. Ltd. ruling, the ITAT held that such deductions are not permissible if the employer deposits the employees' contributions after the due date prescribed under the respective PF and ESI acts. The tribunal clarified that the amendment to Section 43B of the Income Tax Act does not apply to employee contributions. This ruling underscores the distinction between employee and employer contributions, emphasizing that the timely deposit of employee deductions is a statutory obligation. The decision provides certainty on the issue, signaling to businesses that delays in remitting these specific employee welfare funds will result in the disallowance of the expenditure.