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CS Executive · Tax Laws and Practice · Income under the Head Salary

Under section 29(3) of the Income-tax Act, 2025, which payment by an employer to a fund would still be allowed as a deduction?

Contribution to an approved gratuity fund created for employees' exclusive benefit under an irrevocable trust is deductible under section 29(1)(c). Other voluntary payments to societies, trusts or associations are barred by section 29(3) unless covered by clauses (a), (b), (c) or required by another law.

  1. AContribution to an approved gratuity fund created for the exclusive benefit of employees under an irrevocable trustCorrect
  2. BContribution to a staff recreation society registered under the Societies Registration Act, 1860, made voluntarily
  3. CSum paid to set up a private welfare trust run by the directors, not required by any law
  4. DDonation to an association of persons formed for employees' social events

Explanation

Section 29(3) bars deduction for sums paid to funds, trusts, societies or other bodies except as allowed under section 29(1)(a), (b) or (c), or as required by another law. Contribution to an approved gratuity fund falls under clause (c). The others are voluntary and not covered.

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