Section 191 — Tax on accumulated balance of recognised provident fund. Successor to s.111 of the 1961 Act.
Section 191 is in Chapter XIII — Determination of Tax in Special Cases, which runs from section 190 to section 235.
The section applies in one situation: where the accumulated balance due to an employee participating in a recognised provident fund is included in his total income because paragraph 8 of Part A of Schedule XI does not apply to it. In that case, the Assessing Officer is required to calculate the total of the various sums of tax as per the provisions of paragraph 9 of that Part.
A provident fund balance builds over many years, and taxing the whole of it in the single year of receipt at that year's rates would distort the charge. The section therefore does not compute the tax itself; it directs the Assessing Officer to the special computation in paragraph 9 of Part A of Schedule XI whenever the exemption in paragraph 8 of that Part fails.
The section is triggered by the failure of an exemption, not by the withdrawal itself: it operates only where the accumulated balance is included in total income because paragraph 8 of Part A of Schedule XI is not applicable. Once triggered, the tax is not the ordinary tax on the year's total income — the section directs the Assessing Officer to calculate the total of the various sums of tax under paragraph 9, and the substance of the computation lives in that paragraph rather than in the section. The duty is placed on the Assessing Officer in mandatory terms.
An employee withdraws the accumulated balance of his recognised provident fund in a year in which paragraph 8 of Part A of Schedule XI does not exempt it, so the balance enters his total income. The tax on it is not simply the year's rate applied to the whole sum: the Assessing Officer must work out the total of the various sums of tax as paragraph 9 of that Part directs.
A taxpayer never invokes this section directly. It appears in the computation an Assessing Officer makes when a provident fund withdrawal loses the benefit of paragraph 8 of Part A of Schedule XI, and it is the answer to a demand that has simply taxed the whole balance at the year's ordinary rate.
the Assessing Officer shall calculate the total of the various sums of tax as per the provisions of paragraph 9 thereof
See the full 1961 to 2025 concordance.