Finance Act, 2021 provides that Interest income accrued under Provident Fund shall be liable to income tax if such amount exceeds ₹ 2.5 Lakhs in case of an employee (i.e. contribution is made by the employer also for such person) or ₹ 5 Lakhs in case of any other person.

Now, via Notification No. 95/2021 dated 31st August 2021, CBDT has notified new Rule 9D which provides for Calculation of taxable interest relating to contribution in a provident fund or recognised provided fund, exceeding specified limit. As per Rule 9D, separate accounts within the provident fund account shall be maintained during the previous year 2021-2022 and all subsequent previous years for taxable contribution and non-taxable contribution made by a person.

Particulars

Amount

Closing balance in the account as on 31st day of March 2021

XXX

Add: Any contribution made by the person in the account during the previous year 2021-2022 and subsequent previous years, which is not included in the taxable contribution account

XXX

Add: Interest accrued on above amounts

XXX

Less: Withdrawal from such account, if any

(XXX)

Non – Taxable Contribution

XXX

Particulars

Amount

Contribution made by the person in a previous year in the account during the previous year 2021-2022 and subsequent previous years, which is in excess of the threshold limit

XXX

Add: Interest accrued on above contribution

XXX

Less: Withdrawal from such account, if any

(XXX)

Taxable Contribution

XXX

Note :  Threshold Limit in the above rule shall mean ₹ 2.5 Lakhs in case of an employee (i.e. contribution is made by the employer also for such person) or ₹ 5 Lakhs in case of any other person.


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