RULE 277 INCOME-TAX RULES 2026
Calculation of taxable interest relating to contribution in a provident fund or recognised provident fund, exceeding specified limit.
277. (1) Taxable interest under Schedule II [Table: Sl. Nos. 3 and 4. C] to the Act shall be computed as the interest accrued in the taxable contribution account during the tax year.
(2) For the purpose of calculation of taxable interest under sub-rule (1), separate accounts within the provident fund account shall be maintained during the tax year 2021-2022 and all subsequent tax years for taxable contribution and non-taxable contribution made by a person.
(3) For the purposes of this rule,—
| (a) | non-taxable contribution account shall be the aggregate of the following:— |
| (i) | closing balance in the account as on 31st March, 2021; | |
| (ii) | any contribution made by the person in the account during the tax year 2021-2022 and subsequent tax years, which is not included in the taxable contribution account; and | |
| (iii) | interest accrued on sub-clauses (i) and (ii), |
| as reduced by the withdrawal, if any, from such account; | ||
| (b) | taxable contribution account shall be the aggregate of the following:— |
| (i) | contribution made by the person in a tax year in the account during the tax year 2021-2022 and subsequent tax years, which is in excess of the threshold limit; and | |
| (ii) | interest accrued on sub-clause (i), |
| as reduced by the withdrawal, if any, from such account; | ||
| (c) | “taxable interest” means the income by way of interest accrued during the tax year which is not exempt from inclusion in the total income of a person; and | |
| (d) | the threshold limit for the purposes of clause (b)(i) shall mean,— |
| (i) | Rs. 5,00,000 where no contribution is made by the employer of such person; and | |
| (ii) | Rs. 2,50,000 in other cases. |