The share of Contribution of Employee in Employee’s State Insurance Corporation (ESI), Provident Fund (PF) or Superannuation Fund or any other fund for the welfare of Employee after due date as per the Respective act shall be DISALLOWED while computing Income Tax. Even if the share has been paid after the due date, the same shall remain disallowed.
To summarize the Amendment, it will be important for every Employer Assessee to Deposit the share of Employee contribution in given funds BEFORE the respective due date so as to avoid DISALLOWANCE in Income Tax Act.
The earlier provision of depositing employee contribution after respective due date but before income tax return due date stands withdrawn
For Example:
| Clause No. | Old Provision | Provision After Amendment | Impact |
|---|---|---|---|
| 116 (i) | 2(61) "Input Service Distributor" means an office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9, for or on behalf of distinct persons referred to in section 25, and liable to distribute the input tax credit in respect of such invoices in the manner provided in section 20; | 2(61) "Input Service Distributor" means an office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9 of this Act or under subsection (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017, for or on behalf of distinct persons referred to in section 25, and liable to distribute the input tax credit in respect of such invoices in the manner provided in section 20; | Expands the scope of the Input Service Distributor (ISD) to include tax invoices under IGST, effective from 1st April 2025. |
| 116(ii) | 2 (69) (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund; | 2 (69) (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal fund or local fund; | Clarifies the reference to the municipal fund.Provides a clear definition of "local fund" and "municipal fund." |
| Explanation. –– For the purposes of this sub-clause– | |||
| (a) “local fund” means any fund under the control or management of an authority of a local self-government established for discharging civic functions in relation to a Panchayat area and vested by law with the powers to levy, collect and appropriate any tax, duty, toll, cess or fee, by whatever name called; | |||
| (b) “municipal fund” means any fund under the control or management of an authority of a local self-government established for discharging civic functions in relation to a Metropolitan area or Municipal area and vested by law with the powers to levy, collect and appropriate any tax, duty, toll, cess or fee, by whatever name called | |||
| 116(iii) | No definition for "unique identification marking." | ‘(116A) “unique identification marking” means the unique identification marking referred to in clause (b) of sub-section (2) of section 148A and includes a digital stamp, digital mark or any other similar marking, which is unique, secure and non-removable; | Introduces a legal definition for unique identification markings. This provision is a part of a Broad Intent to track certain Goods throughout its supply chain |
| 117 | Section 12. Time of supply of goods. | Section 12(4) is omitted. | Removes the specific provision for the time of supply of vouchers. |
| (4) In case of supply of vouchers by a supplier, the time of supply shall be— | |||
| (a) the date of issue of vouchers, if the supply is identifiable at that point; or | |||
| (b) the date of redemption of vouchers, in all other cases. | |||
| 118 | Section 13. Time of supply of services. | Section 13(4) is omitted. | Removes the specific provision for the time of supply of vouchers for services. |
| (4) In case of supply of vouchers by a supplier, the time of supply shall be— | |||
| (a) the date of issue of voucher, if the supply is identifiable at that point; or | |||
| (b) the date of redemption of voucher, in all other cases. | |||
| 119(i) | Section 17. Apportionment of credit and blocked credits. | Section 17. Apportionment of credit and blocked credits. | Changes interpretation of "plant and machinery," effective from 1st July 2017. Nullifies Judgement of Safari Retreats |
| (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, Input tax credit shall not be available in respect of the following, namely:— | (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, Input tax credit shall not be available in respect of the following, namely:— | ||
| (d) goods or services or both received by a Taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. | (d) goods or services or both received by a Taxable person for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. | ||
| 119(ii) | Explanation 2. ––For the purposes of clause (d), it is hereby clarified that notwithstanding anything to the contrary contained in any judgment, decree or order of any court, tribunal, or other authority, any reference to “plant or machinery” shall be construed and shall always be deemed to have been construed as a reference to “plant and machinery | Nullfies Judgement of Safari Retreats | |
| 120(i) | Section 20. Manner of distribution of credit by Input Service Distributor. | Section 20. Manner of distribution of credit by Input Service Distributor. | Aligns ITC distribution mechanisms to include IGST invoices, effective from 1st April 2025. |
| (1) Any office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9, for or on behalf of distinct persons referred to in section 25, shall be required to be registered as Input Service Distributor under clause (viii) of section 24 and shall distribute the input tax credit in respect of such invoices. | (1) Any office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9 of this Act or under subsection (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017, for or on behalf of distinct persons referred to in section 25, shall be required to be registered as Input Service Distributor under clause (viii) of section 24 and shall distribute the input tax credit in respect of such invoices. | ||
| 120(ii) | Section 20. Manner of distribution of credit by Input Service Distributor. | Section 20. Manner of distribution of credit by Input Service Distributor. | Aligns ITC distribution with IGST provisions, effective from 1st April 2025. |
| (2) The Input Service Distributor shall distribute the credit of central tax or integrated tax charged on invoices received by him, including the credit of central or integrated tax in respect of services subject to levy of tax under sub-section (3) or sub-section (4) of section 9 paid by a distinct person registered in the same State as the said Input Service Distributor, in such manner, within such time and subject to such restrictions and conditions as may be prescribed. | (2) The Input Service Distributor shall distribute the credit of central tax or integrated tax charged on invoices received by him, including the credit of central or integrated tax in respect of services subject to levy of tax under sub-section (3) or sub-section (4) of section 9 of this Act or under subsection (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017 paid by a distinct person registered in the same State as the said Input Service Distributor, in such manner, within such time and subject to such restrictions and conditions as may be prescribed. | ||
| 121 | Section 34. Credit and Debit notes. | Section 34. Credit and Debit notes. | Ensures that a reduction of tax liability can only happen when the recipient reverses the ITC. |
| (2) Any Registered person who issues a Credit note in relation to a supply of goods or services or both shall declare the details of such Credit note in the return for the month during which such Credit note has been issued but not later than 3[the thirtieth day of November] following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed: | (2) Any Registered person who issues a Credit note in relation to a supply of goods or services or both shall declare the details of such Credit note in the return for the month during which such Credit note has been issued but not later than 3[the thirtieth day of November] following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed: | ||
| Provided that no reduction in Output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person. | Provided that no reduction in output tax liability of the supplier shall be permitted, if the–– | ||
| (i) input tax credit as is attributable to such a credit note, if availed, has not been reversed by the recipient, where such recipient is a registered person; or | |||
| (ii) incidence of tax on such supply has been passed on to any other person, in other cases | |||
| 122(i) | Section 38. Communication of details of inward supplies and Input tax credit. | Section 38. Communication of details of inward supplies and Input tax credit. | Allows flexibility in the statement format for GST returns. |
| (1) The details of outward supplies furnished by the Registered persons under sub-section (1) of section 37 and of such other supplies as may be prescribed, and an auto-generated statement containing the details of Input tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within such time, and subject to such conditions and restrictions as may be prescribed. | (1) The details of outward supplies furnished by the Registered persons under sub-section (1) of section 37 and of such other supplies as may be prescribed, and an a statement containing the details of Input tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within such time, and subject to such conditions and restrictions as may be prescribed. | ||
| 122(ii)(a) , 122(ii)(b) | Section 38. Communication of details of inward supplies and Input tax credit. | Section 38. Communication of details of inward supplies and Input tax credit. | Aligns the terminology for GST returns and statements. |
| (2) The auto-generated statement under sub-section (1) shall consist of— | (2) The statement referred in under sub-section (1) shall consist of— | ||
| (a) details of inward supplies in respect of which credit of input tax may be available to the recipient; and | (a) details of inward supplies in respect of which credit of input tax may be available to the recipient; |
||
| (b) details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient, on account of the details of the said supplies being furnished under sub-section (1) of section 37,– | (b) details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient including, on account of the details of the said supplies being furnished under sub-section (1) of section 37,– | ||
| 122(ii)(c) | No clause for additional prescribed details in the statement. | (c) such other details as may be prescribed. | Provides flexibility for additional prescribed details to be included in the statement. |
| 123 | Section 39. Furnishing of returns. | Section 39. Furnishing of returns. | |
| 6[(1) Every Registered person, other than an Input Service Distributor or a non-resident Taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, a return, electronically, of inward and outward supplies of goods or services or both, Input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed: | 6[(1) Every Registered person, other than an Input Service Distributor or a non-resident Taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, a return, electronically, of inward and outward supplies of goods or services or both, Input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, and subject to such conditions and restrictions, as may be prescribed: | ||
| 124 | Section 107. Appeals to Appellate Authority. | Section 107. Appeals to Appellate Authority. | |
| (6) No appeal shall be filed under sub-section (1), unless the appellant has paid— | (6) No appeal shall be filed under sub-section (1), unless the appellant has paid— | ||
| (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and | (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and | ||
| (b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed. | (b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, 1[subject to a maximum of 3[twenty] crore rupees,] in relation to which the appeal has been filed. | ||
| Provided that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant. | Provided that in case of any order demanding penalty without involving demand of any tax, no appeal shall be filed against such order unless a sum equal to ten per cent. of the said penalty has been paid by the appellant. | ||
| 125 | Section 112. Appeals to Appellate Tribunal. | Section 112. Appeals to Appellate Tribunal. | |
| (8) No appeal shall be filed under sub-section (1), unless the appellant has paid— | (8) No appeal shall be filed under sub-section (1), unless the appellant has paid— | ||
| (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and | (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and | ||
| (b) a sum equal to ten per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed. | (b) a sum equal to ten per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed. | ||
| Provided that in case of any order demanding penalty without involving demand of any tax, no appeal shall be filed against such order unless a sum equal to ten per cent. of the said penalty, in addition to the amount payable under the proviso to sub-section (6) of section 107 has been paid by the appellant. | |||
| 126 | No Provision | 122B. Notwithstanding anything contained in this Act, where any person referred to in clause (b) of sub-section (1) Penalty for failure to 68 of section 148A acts in contravention of the provisions of the said section, he shall, in addition to any penalty under Chapter XV or the provisions of this Chapter, be liable to pay a penalty equal to an amount of one lakh rupees or ten per cent. of the tax payable on such goods, whichever is higher | |
| 127 | NO Provison | 148A. (1) The Government may, on the recommendations of the Council, by notification, specify, – Track and trace mechanism for certain goods. | |
| (a) the goods; | |||
| (b) persons or class of persons who are in possession or deal with such goods, | |||
| to which the provisions of this section shall apply. | |||
| (2) The Government may, in respect of the goods referred to in clause (a) of sub-section (1), –– | |||
| (a) provide a system for enabling affixation of unique identification marking and for electronic storage and access of information contained therein, through such persons, as may be prescribed; and | |||
| (b) prescribe the unique identification marking for such goods, including the information to be recorded therein. | |||
| (3) The persons referred to in sub-section (1), shall, –– | |||
| (a) affix on the said goods or packages thereof, a unique identification marking, containing such information and in such manner; | |||
| (b) furnish such information and details within such time and maintain such records or documents, in such form and manner; | |||
| (c) furnish details of the machinery installed in the place of business of manufacture of such goods, including the identification, capacity, duration of operation and such other details or information, within such time and in such form and manner; | |||
| (d) pay such amount in relation to the system referred to in sub-section (2), as may be prescribed.” | |||
| 128 | SCHEDULE III | SCHEDULE III | |
| ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES | ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES | ||
| 8. (a) Supply of warehoused goods to any person before clearance for home consumption; | 8. (a) Supply of warehoused goods to any person before clearance for home consumption; | ||
| (aa) Supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area;”; | |||
| (ii) in Explanation 2, after the words “For the purposes of”, the words, brackets and letter “clause (a) of” shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2017; | |||
| (iii) after Explanation 2, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2017, namely: –– | |||
| “Explanation 3. –– For the purposes of clause (aa) of paragraph 8, the expressions “Special Economic Zone”, “Free Trade Warehousing Zone” and “Domestic Tariff Area” shall have the same meanings respectively as assigned to them in section 2 of the Special Economic Zones Act, 2005. | |||
| 129 | No refund of tax already paid will be available for the aforesaid activities or transactions referred to in clause 128. | ||
In the given case, Employee share of deposit of the month October, January and March totalling to Rs. 1,047/- (Rs. 355+ 332+360) shall be disallowed while computing income even though it has been paid within Due date of filing of Return. The same shall never be permissible as cost.