The Central Board of Direct Taxes has passed Income Tax (25th Amendment) Rules, 2021 on August 31, 2021. The Income Tax (25th Amendment) Rules, 2021 shall come into force on April 1, 2022. The Amendment inserts Rule 9D prescribing calculation of taxable interest relating to contribution in a provident fund, exceeding specified limit. For the calculation of taxable interest relating to provident fund, following points to be taken into consideration under Rule 9D:
- The Non-taxable contribution account shall be the aggregate of the following:
- closing balance in the account as on March 31, 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; and
- interest accrued as reduced by withdrawal
- The Taxable contribution account shall be the aggregate of the following:
- 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; and
- interest accrued as reduced by the withdrawal, if any, from such account; and
The threshold limit shall mean:
- five lakh rupees, if the second proviso to clause (11) or clause (12) of section 10 is applicable; and
- two lakh and fifty thousand rupees in other cases.
*Tanvi Singh, Editorial Assistant has reported this brief.