The Central Board of Direct Taxes (CBDT) has notified a new rule for calculation of taxable interest relating to contribution in a Provident Fund (PF) which is exceeding specified limit, will be effective from 1st April, 2022.
The amendment provides that while Calculating taxable interest relating to contribution in a provident fund or recognized provided fund, exceeding specified limit, non-taxable contribution account shall be the aggregate of the following, namely:-
- Closing balance in the account as on 31st day of March 2021;
- 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; etc.
“For the purposes of the first and second provisos to clauses (11) and (12) of section 10 , income by way of interest accrued during the previous year which is not exempt from inclusion in the total income of a person under the said clauses (hereinafter in this rule referred to as the taxable interest), shall be computed as the interest accrued during the previous year in the taxable contribution account. For the purpose of calculation of taxable interest under sub-rule (1), 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.” Reads the rules.