Income-tax (25th Amendment) Rules, 2021


Quick Summary
The Income-tax (25th Amendment) Rules, 2021, introduce new regulations for calculating taxable interest on provident fund (PF) and recognised provident fund contributions. These rules, effective from 1st April 2022, require separate accounts to be maintained for taxable and non-taxable contributions. Taxable interest will be computed on contributions exceeding a specified threshold, which is £5 lakh for certain cases and £2.5 lakh for others.

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
New Delhi

Notification No. 95/2021-Income Tax

Dated:  31st August, 2021

G.S.R. 604(E). - In exercise of the powers conferred by the first proviso to clause (11) of section 10 and the first proviso to clause (12) of section 10 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement. (1) These rules may be called the Income-tax (25th Amendment) Rules, 2021.

(2)    They shall come into force on 1st day of April, 2022.

2. In the Income-tax Rules, 1962, after the rule 9C, the following rule shall be inserted, namely: -

“9D. Calculation of taxable interest relating to contribution in a provident fund or recognised provided fund, exceeding specified limit.-

(1)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.

(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 previous year 2021-2022 and all subsequent previous years for taxable contribution and non-taxable contribution made by a person.

Explanation: For the purposes of this rule,-

(a) Non-taxable contribution account shall be the aggregate of the following, namely:-

(i) closing balance in the account as on 31st day of March 2021;

(ii) 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

(iii) interest accrued on sub- clause (i) and sub- clause (ii),

as reduced by the withdrawal, if any, from such account;

(b) Taxable contribution account shall be the aggregate of the following, namely:-

(i) 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

(ii) interest accrued on sub- clause (i),

as reduced by the withdrawal, if any, from such account; and

(c) The threshold limit shall mean:

(i) five lakh rupees, if the second proviso to clause (11) or clause (12) of section 10 is applicable; and

(ii) two lakh and fifty thousand rupees in other cases.”.

[Notification No. 95/2021/ F. No. 370142/36/2021-TPL]

NEHA SAHAY, Under Secy. (Tax Policy and Legislation Division)

Note : The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969(E) dated 26th March, 1962 and were last amended vide notification number G.S.R. 578(E) dated 18th August, 2021.

FAQ :

These are new rules that amend the Income-tax Rules, 1962, specifically concerning the calculation of taxable interest on contributions to provident funds and recognised provident funds.

The Income-tax (25th Amendment) Rules, 2021, come into force on the 1st day of April, 2022.

The rules introduce a method for calculating taxable interest on contributions to provident funds that exceed specified limits, requiring separate accounts for taxable and non-taxable contributions.

The threshold limit is £5 lakh if the second proviso to clause (11) or clause (12) of section 10 is applicable, and £2.5 lakh in other cases.

Taxable interest will be computed as the interest accrued during the previous year in the 'taxable contribution account', which includes contributions exceeding the threshold limit and the interest accrued on them.

The non-taxable contribution account includes the closing balance as of 31st March 2021, any non-taxable contributions made during the previous year 2021-2022 and subsequent years, and the interest accrued on these, minus any withdrawals.

 

Comments




CCI Pro





Company
Featured 18 July 2026
CA Articleship

apricus india

Mumbai

CA Inter

View Details
Company
23 July 2026
Semi qualified CA

Garg Bros & Associate CA

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 16 July 2026
CA Article

Pipara & Co. LLP.

Mumbai

CA Inter

View Details
Company
31 July 2026
Senior Accountant - Bunia, Democratic Republic of Congo

AD GLOBAL LTD

Mumbai

B.Com

View Details
Company
ARTICLESHIP 16 July 2026
Article Assistant

Sahil Agarwal & Company

Mumbai

CA Inter

View Details
Company
29 July 2026
Audit Executive

RBSM Corporate Advisors Private Limited

Pune

CA

View Details
Company
ARTICLESHIP 28 July 2026
Article/Intern/Semi-Qualified/Fresher B.Com

VNSS & Co

Mumbai

Others

View Details
Company
13 July 2026
AVP / VP - PCG Advisory

Workforce Connect

Mumbai

MBA

View Details
Follow