Income-tax Rules, 2026

Rule 277Calculation of taxable interest relating to contribution in a provident fund or recognised provident fund, exceeding specified limit

Income-tax Rules, 2026 · G.S.R. 198(E), dated 20-03-2026

(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)₹500000 where no contribution is made by the employer of such person; and

(ii)₹250000 in other cases.

This rule refers to

§ Schedule II INCOME NOT TO BE INCLUDED IN TOTAL INCOME

Referenced by

Rule 15 Valuation of perquisites