Employee provident fund delay remains disallowable when deposit misses the statutory wage-period deadline

Employee's contribution to provident fund and ESI, once deducted from wages, is deductible only if credited to the relevant fund within the statutory due date under section 36(1)(va) of the Income-tax Act. The due date is linked to the time prescribed under the applicable welfare law, and section 38 of the Employees' Provident Funds and Miscellaneous Provisions Act requires remittance within fifteen days of the close of the month for which wages are payable. That period cannot be shifted by reference to the month of actual salary disbursement, and payment before the return-filing deadline does not cure the default. The delayed deposit therefore remained disallowable.

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Issues: Whether employee's contribution to provident fund and ESI, deposited after the prescribed due date under section 36(1)(va), remains disallowable even if paid before the due date for filing the return of income, and whether the reference in section 38 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 to deposit within fifteen days of the close of every month is to be read with the month in which wages are actually paid.

Analysis: The employee's contribution, once deducted from wages, is governed by section 36(1)(va) of the Income-tax Act, 1961, which permits deduction only if the amount is credited to the relevant fund on or before the due date. The explanation to that provision links the due date to the time prescribed under the relevant welfare law. Reading section 38 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the obligation is to remit the contribution within fifteen days of the close of the month for which wages are payable and from which deduction is made. The period cannot be shifted by reference to the month in which salary happens to be disbursed.

Conclusion: The delayed deposit remained outside the permissible due date and was rightly disallowed.

Final Conclusion: The appeal failed, and the disallowance of employee's contributions to provident fund and ESI was upheld.

Ratio Decidendi: For purposes of section 36(1)(va), employee's contribution must be deposited within the statutory due date computed with reference to the wage period to which the liability relates, and payment before the return-filing deadline does not cure the default.

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