Section 43B of Income Tax Act "Certain deductions to be only on actual payment"
43B. Notwithstanding anything contained in any other
provision of this Act, a deduction otherwise allowable under
this Act in respect of-
(a) any sum payable by the assessee by way of tax, duty,
cess or fee, by whatever name called, under any law for the
time being in force, or
(b) any sum payable by the assessee as an employer by way of
contribution to any provident fund or superannuation fund or
gratuity fund or any other fund for the welfare of
employees, or
(c) any sum referred to in clause (ii) of sub-section (1) of
section 36, or
(d) any sum payable by the assessee as interest on any loan
or borrowing from any public financial institution or a
State financial corporation or a State industrial investment
corporation, in accordance with the terms and conditions of
the agreement governing such loan or borrowing, or
80[(da) any sum payable by the assessee as interest on any
loan or borrowing from a deposit taking non-banking
financial company or systemically important non-deposit
taking non-banking financial company, in accordance with the
terms and conditions of the agreement governing such loan or
borrowing, or]
(e) any sum payable by the assessee as interest on any loan
or advances from a scheduled bank or a co-operative bank
other than a primary agricultural credit society or a
primary co-operative agricultural and rural development bank
in accordance with the terms and conditions of the agreement
governing such loan or advances, or
(f) any sum payable by the assessee as an employer in lieu
of any leave at the credit of his employee, or :
(g) any sum payable by the assessee to the Indian
Railways for the use of railway assets,
shall be allowed (irrespective of the previous year in which
the liability to pay such sum was incurred by the assessee
according to the method of accounting regularly employed by
him) only in computing the income referred to in section 28
of that previous year in which such sum is actually paid by
him :
Provided that nothing contained in this section shall apply
in relation to any sum which is actually paid by the
assessee on or before the due date applicable in his case
for furnishing the return of income under sub-section (1) of
section 139 in respect of the previous year in which the
liability to pay such sum was incurred as aforesaid and the
evidence of such payment is furnished by the assessee along
with such return.
Explanation1.-For the removal of doubts, it is hereby
declared that where a deduction in respect of any sum
referred to in clause (a) or clause (b) of this section is
allowed in computing the income referred to in section 28 of
the previous year (being a previous year relevant to the
assessment year commencing on the 1st day of April, 1983, or
any earlier assessment year) in which the liability to pay
such sum was incurred by the assessee, the assessee shall
not be entitled to any deduction under this section in
respect of such sum in computing the income of the previous
year in which the sum is actually paid by him.
Explanation 2.-For the purposes of clause (a), as in force
at all material times, "any sum payable" means a sum for
which the assessee incurred liability in the previous year
even though such sum might not have been payable within that
year under the relevant law.
Explanation 3.-For the removal of doubts it is hereby
declared that where a deduction in respect of any sum
referred to in clause (c) or clause (d) of this section is
allowed in computing the income referred to in section 28 of
the previous year (being a previous year relevant to the
assessment year commencing on the 1st day of April, 1988, or
any earlier assessment year) in which the liability to pay
such sum was incurred by the assessee, the assessee shall
not be entitled to any deduction under this section in
respect of such sum in computing the income of the previous
year in which the sum is actually paid by him.
Explanation 3A.-For the removal of doubts, it is hereby
declared that where a deduction in respect of any sum
referred to in clause (e) of this section is allowed in
computing the income referred to in section 28 of the
previous year (being a previous year relevant to the
assessment year commencing on the 1st day of April, 1996, or
any earlier assessment year) in which the liability to pay
such sum was incurred by the assessee, the assessee shall
not be entitled to any deduction under this section in
respect of such sum in computing the income of the previous
year in which the sum is actually paid by him.
81[Explanation 3AA.-For the removal of doubts, it is hereby
declared that where a deduction in respect of any sum
referred to in clause (da) is allowed in computing the
income referred to in section 28, of the previous year
(being a previous year relevant to the assessment year
commencing on the 1st day of April, 2019, or any earlier
assessment year) in which the liability to pay such sum was
incurred by the assessee, the assessee shall not be entitled
to any deduction under this section in respect of such sum
in computing the income of the previous year in which the
sum is actually paid by him.]
Explanation 3B.-For the removal of doubts, it is hereby
declared that where a deduction in respect of any sum
referred to in clause (f) of this section is allowed in
computing the income, referred to in section 28, of the
previous year (being a previous year relevant to the
assessment year commencing on the 1st day of April, 2001, or
any earlier assessment year) in which the liability to pay
such sum was incurred by the assessee, the assessee shall
not be entitled to any deduction under this section in
respect of such sum in computing the income of the previous
year in which the sum is actually paid by him.
Explanation 3C.-For the removal of doubts, it is hereby
declared that a deduction of any sum, being interest payable
under clause (d) of this section, shall be allowed if such
interest has been actually paid and any interest referred to
in that clause which has been converted into a loan or
borrowing shall not be deemed to have been actually paid.
82[Explanation 3CA.-For the removal of doubts, it is hereby
declared that a deduction of any sum, being interest payable
under clause (da), shall be allowed if such interest has
been actually paid and any interest referred to in that
clause which has been converted into a loan or borrowing
shall not be deemed to have been actually paid.]
Explanation 3D.-For the removal of doubts, it is hereby
declared that a deduction of any sum, being interest payable
under clause (e) of this section, shall be allowed if such
interest has been actually paid and any interest referred to
in that clause which has been converted into a loan or
advance shall not be deemed to have been actually paid.
Explanation 4.-For the purposes of this section,-
(a) "public financial institutions" shall have the meaning
assigned to it in section 4A of the Companies Act, 1956 (1
of 1956);
(aa) "scheduled bank" shall have the meaning assigned to it
in the Explanation to clause (iii) of sub-section (5) of
section 11;
(b) "State financial corporation" means a financial
corporation established under section 3 or section 3A or an
institution notified under section 46 of the State Financial
Corporations Act, 1951 (63 of 1951);
(c) "State industrial investment corporation" means a
Government company within the meaning of section 617 of the
Companies Act, 1956 (1 of 1956), engaged in the business of
providing long-term finance for industrial projects and
eligible for deduction under clause (viii) of sub-section
(1) of section 36;
(d) "co-operative bank", "primary agricultural credit
society" and "primary co-operative agricultural and rural
development bank" shall have the meanings respectively
assigned to them in the Explanation to sub-section (4) of
section 80P;
83[(e) "deposit taking non-banking financial company" means
a non-banking financial company which is accepting or
holding public deposits and is registered with the Reserve
Bank of India under the provisions of the Reserve Bank of
India Act, 1934 (2 of 1934);
(f) "non-banking financial company" shall have the meaning
assigned to it in clause (f) of section 45-I of the Reserve
Bank of India Act, 1934 (2 of 1934);
(g) "systemically important non-deposit taking non-banking
financial company" means a non-banking financial company
which is not accepting or holding public deposits and having
total assets of not less than five hundred crore rupees as
per the last audited balance sheet and is registered with
the Reserve Bank of India under the provisions of the
Reserve Bank of India Act, 1934 (2 of 1934).]