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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies

Under the Income-tax Act, 2025 (applicable from June 2027), which of the following sums is covered by the list of items deductible only on actual payment under section 37?

Employer's contribution to a provident fund is covered. Section 37(2)(b) names contributions to provident, superannuation, gratuity and employee welfare funds as sums deductible only when actually paid. Salary, rent and audit fees are not listed, so they stay under the assessee's regular accounting method.

  1. AEmployer's contribution to a recognised provident fundCorrect
  2. BSalary payable to a factory manager for March
  3. CRent payable to a landlord for the last month of the tax year
  4. DAudit fees payable to a chartered accountant

Explanation

Section 37(2)(b) lists the employer's contribution to a provident fund, superannuation fund, gratuity fund or any employee welfare fund. Salary, rent and audit fees are not in the list in section 37(2), so they follow the regular method of accounting.

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