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NEW DELHI: Perhaps taking a cue from the case of Kingfisher Airlines where provident fund dues were not deposited in time, the finance bill has introduced a harsh ‘clarification’. The
explanatory memorandum points out that the employee’s contribution is his own money and the employer deposits this contribution on behalf of the employee in a fiduciary capacity. “By late
deposit of the employee contribution, the employer gets unjustly enriched by keeping the money belonging to the employees,” it states. The bill clarifies that if there is a delay in
depositing the provident fund amount by the due date, which is the 15th of the next month, even if such deposit is made before the date of filing the return of income, this sum will not be
allowed as a deduction in the hands of the employer. Under the proposed provisions, the employer’s taxable income will stand enhanced to the extent of the late deposit. Further, this
provision has retrospective effect and is applicable from FY21.
