# Section 36: Employee Welfare Payments
Four sub-clauses cover the most common employee-side expenses, each with its own discipline.
## (1) Section 36(1)(ii) — Bonus or Commission to Employees
Bonus or commission paid to employees is allowed, subject to two conditions:
1. It must not otherwise be payable as profit or dividend (i.e., disguised distributions to shareholder-employees are disallowed).
2. Section 43B applies — i.e., allowed only if actually paid on or before the due date of filing return u/s 139(1).
## (2) Section 36(1)(iva) — Employer's Contribution to NPS u/s 80CCD
Employer's contribution to the National Pension Scheme is allowed up to the lower of:
| Limb | Detail |
|---|---|
| (i) Actual contribution made | xxx |
| (ii) 14% of Salary [Basic + DA (forming part of retirement benefits)] | xxx |
Any excess contribution is disallowed under Sec 40A(9).
## (3) Section 36(1)(iv) / 36(1)(v) — Employer's Contribution to Funds
Deduction is allowed for employer's contribution to:
- Statutory Provident Fund (SPF)
- Recognised Provident Fund (RPF)
- Approved Gratuity Fund (AGF)
- Any Approved Provident Fund
Section 43B applies — deduction only if actually paid by the due date of return.
Important: Contribution to unrecognised or unapproved funds is NOT allowed.
## (4) Section 36(1)(va) — Employees' Contribution to Welfare Funds
When the employee's share of PF/ESI etc. is recovered by the employer from the employee's salary, it is first taxed as the employer's income (Sec 2(24)(x)) and then allowed as deduction only if deposited by the due date prescribed under the relevant fund's Act (e.g., PF Act: 15th of next month) — NOT the due date of filing the income-tax return.
This is the critical distinction from employer's contribution: Section 43B does NOT apply here; the fund's own due date is the cut-off. If missed, the disallowance is permanent.