Employee welfare expenses: Clause 29 of the Income Tax Bill, 2025 vs. Sections 36 and 40A of the Income Tax Act, 1961

Employee welfare deductions clarified: new limits, timing and eligibility for employer contributions under Clause 29.

Clause 29 prescribes conditions and limits for deducting employer contributions to recognized provident funds, approved superannuation funds, pension schemes (subject to a uniform percentage of salary including dearness allowance), and approved gratuity funds, sets the due date rules for employee contributions, and restricts deductions for provisions or contributions unless expressly authorised, thereby clarifying and refining the deductibility regime compared with current Sections 36 and 40A.