Section(s) Referred: 36 ,36(1) ,36(1)(iv)
Statute: INCOME TAX
Date of Issue: 21/10/1965
In exercise of the powers conferred by clause (iv) of sub-section (1) of section 36 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby specifies the following conditions for the deduction of contributions, not being annual contributions of fixed amounts or annual contributions fixed on some definite basis by reference to the income chargeable under the head ‘Salaries’ or to the contributions or to the number of members of the fund, namely :-
1. The total amount of contribution that shall be taken into account for the purposes of this notification shall not exceed twenty-five per cent. of the employee’s salary for each year of his past service with the employer as reduced by the employer’s contribution, if any, to any provident fund (whether recognised or not) in respect of that employee for each such year.
2. Subject to condition 1, eighty per cent. of the amount actually paid by the employer by way of contribution during any previous year shall be the deductible allowance.
3. One-fifth of such deductible allowance shall be allowed in the assessment year relating to the previous year in which the amount was actually paid and the balance of the deductible allowance shall be allowed in equal instalments for each of the four immediately succeeding assessment years
I am engineer, MBA and CFA. Yet I cannot understand these 3 sentences. Indian laws are pathetic so are the people explaining those laws. There is no way a layman can understand this. There are no examples. Why should the whole world fit in one sentence. Cant you write more than one sentence in simple words. Pathetic explanation