CS Executive · Tax Laws and Practice · Computation of Total Income and Tax Liability of various Entities
Kiran Pvt Ltd (tax year 2026-27) owes Rs 3,00,000 to a micro enterprise supplier beyond the time limit in section 15 of the MSMED Act, 2006, and pays it in June 2027, before its return due date. Separately, it owes Rs 1,00,000 of employer provident fund contribution for 2026-27, paid in June 2027, also before the return due date. Treating both as otherwise deductible, what is the deduction for 2026-27 under section 37 of the Income-tax Act, 2025?
The deduction for 2026-27 is Rs 1,00,000. The provident fund contribution paid before the return due date qualifies under the section 37(3) relaxation, but the payment to the micro enterprise beyond the section 15 time limit is excluded from it and is allowed only in the year it is actually paid.
- ARs 4,00,000, as both were paid before the return due date
- BRs 3,00,000 only, the supplier payment
- CNil, as neither was paid within 2026-27
- DRs 1,00,000 only, the provident fund contributionCorrect
Explanation
Section 37(3) relaxation applies to the amounts in section 37(2) except clause (g), the micro or small enterprise delayed payment. The PF contribution, paid before the return due date, is allowed in 2026-27: Rs 1,00,000. The Rs 3,00,000 under clause (g) is allowed only in the year of actual payment, 2027-28, so adding it gives the wrong Rs 4,00,000.
Did you get it right without looking?
One question tells you little. A timed set on Computation of Total Income and Tax Liability of various Entities shows your real accuracy, how long you take and where you lose marks.
More Computation of Total Income and Tax Liability of various Entities questions
- Under the Income-tax Act, 2025, a non-resident Indian has investment income of Rs 3,00,000 and incurred Rs 20,000 on expenses connected with…
- Under the Income-tax Act, 2025, Mr. Kiran Rao, a non-resident Indian, has gross total income consisting only of interest from a foreign-curr…
- Mr. Kabir Joshi is a non-resident Indian whose gross total income for the tax year consists only of interest on foreign-currency bonds that …
- Under the Income-tax Act, 2025, a company owes Rs 2,50,000 to a micro enterprise for supplies, and payment is made after the time limit spec…
- Where an offence under the Income-tax Act, 2025 is committed by a Hindu undivided family, who is deemed guilty of the offence in the first i…
- Which of the following is regarded as a 'partition' of a HUF under the Income-tax Act, 2025 for the purposes of the assessment-after-partiti…