My client's Form 16 now shows a perquisite for the employer's contribution to the superannuation fund and to NPS. Is there a separate limit for each fund, and what is the extra line for annual accretion?
There is one limit, not three. Section 17(2)(vii) makes the amount or the aggregate of amounts of any contribution made to the assessee's account by the employer in a recognised provident fund, in the scheme referred to in s.80CCD(1) and in an approved superannuation fund a perquisite to the extent it exceeds seven lakh and fifty thousand rupees in a previous year — a single aggregate figure across all three. Section 17(2)(viia) then makes the annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of those funds a further perquisite, to the extent it relates to the contribution already taxed under sub-clause (vii), computed in the manner prescribed. Separately, s.10(13) exempts payments out of an approved superannuation fund on the death of a beneficiary, to an employee in lieu of or in commutation of an annuity on retirement at or after a specified age or on incapacity, by way of refund of contributions on death, by way of refund of contributions on leaving service otherwise than by such retirement or incapacity to the extent the payment does not exceed the contributions made before the commencement of the Act and interest on them, and by way of transfer to the employee's account under a pension scheme referred to in s.80CCD and notified by the Central Government. Both sub-clauses date from 1 April 2021: section 13 of the Finance Act, 2020 substituted sub-clause (vii) and inserted sub-clause (viia) with effect from that date, so the aggregate ceiling first applies for assessment year 2021-22. Before that, sub-clause (vii) reached only the employer's contribution to an approved superannuation fund and only above one lakh and fifty thousand rupees, and there was no sub-clause (viia) at all.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2021-04-01, reported as Income-tax Act, 1961, s.17(2)(vii) and (viia) as printed on the departmental Year 2025 and Year 2024 (No. 1) pages; s.10(13) as printed on the departmental Year 2018 page. It bears on section 10(13), section 17(2)(vii), section 17(2)(viia), section 17(3)(ii), section 80CCD, section 80CCD(1), section 10(11), section 10(12), section Rule 3B of the Income Tax Act 1961, in Salary & Perquisites and Capital Gains Exemptions matters.
Two mistakes recur. The first is treating the Rs. 7,50,000 as three separate allowances; it is one aggregate across the recognised provident fund, the s.80CCD(1) scheme and the approved superannuation fund, so a senior employee with generous contributions to all three can be well over the line even though no single fund looks excessive. The second is forgetting sub-clause (viia): once an excess contribution has been taxed under sub-clause (vii) in any previous year, the annual accretion referable to it is a perquisite in every later year, so the charge is recurring and not one-off, and the phrase "which is included in total income under the said sub-clause in any previous year" carries that forward. Note the boundaries. Section 17(2)(vii) taxes the EMPLOYER's contribution; the provisos to s.10(11) and s.10(12) tax the interest on the EMPLOYEE's own contribution above Rs. 2,50,000 or Rs. 5,00,000 — different sides of the fund, both potentially in the same year. Section 10(13) is a payment-out provision, and its sub-clause (iv) is narrower than it looks: a refund of contributions to an employee who leaves service otherwise than by retirement at or after a specified age or on incapacity is exempt only to the extent of contributions made BEFORE the commencement of the Act and interest on them, which for practical purposes means almost nothing today. Sub-clause (v) is the one that makes a transfer from a superannuation fund into a notified pension scheme under s.80CCD tax-neutral. And note that s.17(3)(ii) expressly carves payments referred to in clause (13) of section 10 out of profits in lieu of salary, so a payment inside s.10(13) is not brought back in by that route.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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As printed on the Year 2025 departmental page for section 17, sub-section (2) includes as a perquisite: "(vii) the amount or the aggregate of amounts of any contribution made to the account of the assessee by the employer— (a) in a recognised provident fund; (b) in the scheme referred to in sub-section (1) of section 80CCD; and (c) in an approved superannuation fund, to the extent it exceeds seven lakh and fifty thousand rupees in a previous year; (viia) the annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme referred to in sub-clause (vii) to the extent it relates to the contribution referred to in the said sub-clause which is included in total income under the said sub-clause in any previous year computed in such manner as may be prescribed; and (viii) the value of any other fringe benefit or amenity as may be prescribed". The Year 2024 (No. 1) page prints (vii) and (viia) in the same words and carries against (viia) a single footnote reading "See rule 3B". As printed on the Year 2018 departmental page for section 10, clause (13) reads: any payment from an approved superannuation fund made— (i) on the death of a beneficiary; or (ii) to an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement; or (iii) by way of refund of contributions on the death of a beneficiary ; or (iv) by way of refund of contributions to an employee on his leaving the service in connection with which the fund is established otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement, to the extent to which such payment does not exceed the contributions made prior to the commencement of this Act and any interest thereon; or (v) by way of transfer to the account of the employee under a pension scheme referred to in section 80CCD and notified by the Central Government. Section 17(3)(ii), as printed on the Year 2025 page, expressly excludes from profits in lieu of salary any payment referred to in clause (13) of section 10.
The employer's contribution to a recognised provident fund, to the scheme referred to in s.80CCD(1) and to an approved superannuation fund is a perquisite under s.17(2)(vii) to the extent the AGGREGATE of those contributions exceeds seven lakh and fifty thousand rupees in a previous year; there is one ceiling for all three funds together. Under s.17(2)(viia) the annual accretion by way of interest, dividend or any other amount of similar nature to the balance at the credit of those funds is a further perquisite so far as it relates to a contribution taxed under sub-clause (vii) in any previous year, computed in the prescribed manner. Section 10(13) exempts payments out of an approved superannuation fund in the five situations it lists, the refund-on-leaving-service limb in sub-clause (iv) being confined to contributions made before the commencement of the Act and interest on them. Sub-clause (vii) in this form was substituted, and sub-clause (viia) inserted, by section 13 of the Finance Act, 2020 with effect from 1 April 2021. The annual accretion under sub-clause (viia) is computed under rule 3B of the Income-tax Rules, 1962, by the formula TP = (PC/2) x R + (PC1 + TP1) x R.
Not applicable — this is a statement of statutory text taken from departmental pages. No judicial reasoning is involved. The relationship with s.17(3)(ii) is drawn from that clause as printed on the same Year 2025 page for section 17.
to the extent it exceeds seven lakh and fifty thousand rupees in a previous year;
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppThere is one limit, not three. Section 17(2)(vii) makes the amount or the aggregate of amounts of any contribution made to the assessee's account by the employer in a recognised provident fund, in the scheme referred to in s.80CCD(1) and in an approved superannuation fund a perquisite to the extent it exceeds seven lakh and fifty thousand rupees in a previous year — a single aggregate figure across all three. Section 17(2)(viia) then makes the annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of those funds a further perquisite, to the extent it relates to the contribution already taxed under sub-clause (vii), computed in the manner prescribed. Separately, s.10(13) exempts payments out of an approved superannuation fund on the death of a beneficiary, to an employee in lieu of or in commutation of an annuity on retirement at or after a specified age or on incapacity, by way of refund of contributions on death, by way of refund of contributions on leaving service otherwise than by such retirement or incapacity to the extent the payment does not exceed the contributions made before the commencement of the Act and interest on them, and by way of transfer to the employee's account under a pension scheme referred to in s.80CCD and notified by the Central Government. Both sub-clauses date from 1 April 2021: section 13 of the Finance Act, 2020 substituted sub-clause (vii) and inserted sub-clause (viia) with effect from that date, so the aggregate ceiling first applies for assessment year 2021-22. Before that, sub-clause (vii) reached only the employer's contribution to an approved superannuation fund and only above one lakh and fifty thousand rupees, and there was no sub-clause (viia) at all. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 10(13), section 17(2)(vii), section 17(2)(viia), section 17(3)(ii), section 80CCD, section 80CCD(1), section 10(11), section 10(12), section Rule 3B of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.17(2)(vii) and (viia) as printed on the departmental Year 2025 and Year 2024 (No. 1) pages; s.10(13) as printed on the departmental Year 2018 page. Two mistakes recur. The first is treating the Rs. 7,50,000 as three separate allowances; it is one aggregate across the recognised provident fund, the s.80CCD(1) scheme and the approved superannuation fund, so a senior employee with generous contributions to all three can be well over the line even though no single fund looks excessive. The second is forgetting sub-clause (viia): once an excess contribution has been taxed under sub-clause (vii) in any previous year, the annual accretion referable to it is a perquisite in every later year, so the charge is recurring and not one-off, and the phrase "which is included in total income under the said sub-clause in any previous year" carries that forward. Note the boundaries. Section 17(2)(vii) taxes the EMPLOYER's contribution; the provisos to s.10(11) and s.10(12) tax the interest on the EMPLOYEE's own contribution above Rs. 2,50,000 or Rs. 5,00,000 — different sides of the fund, both potentially in the same year. Section 10(13) is a payment-out provision, and its sub-clause (iv) is narrower than it looks: a refund of contributions to an employee who leaves service otherwise than by retirement at or after a specified age or on incapacity is exempt only to the extent of contributions made BEFORE the commencement of the Act and interest on them, which for practical purposes means almost nothing today. Sub-clause (v) is the one that makes a transfer from a superannuation fund into a notified pension scheme under s.80CCD tax-neutral. And note that s.17(3)(ii) expressly carves payments referred to in clause (13) of section 10 out of profits in lieu of salary, so a payment inside s.10(13) is not brought back in by that route. If it applies to you, the first step is this: Add the three employer contributions together — recognised provident fund, the s.80CCD(1) scheme and the approved superannuation fund — before applying the Rs. 7,50,000 test. Do not test them separately.
As printed on the Year 2025 departmental page for section 17, sub-section (2) includes as a perquisite: "(vii) the amount or the aggregate of amounts of any contribution made to the account of the assessee by the employer— (a) in a recognised provident fund; (b) in the scheme referred to in sub-section (1) of section 80CCD; and (c) in an approved superannuation fund, to the extent it exceeds seven lakh and fifty thousand rupees in a previous year; (viia) the annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme referred to in sub-clause (vii) to the extent it relates to the contribution referred to in the said sub-clause which is included in total income under the said sub-clause in any previous year computed in such manner as may be prescribed; and (viii) the value of any other fringe benefit or amenity as may be prescribed". The Year 2024 (No. 1) page prints (vii) and (viia) in the same words and carries against (viia) a single footnote reading "See rule 3B". As printed on the Year 2018 departmental page for section 10, clause (13) reads: any payment from an approved superannuation fund made— (i) on the death of a beneficiary; or (ii) to an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement; or (iii) by way of refund of contributions on the death of a beneficiary ; or (iv) by way of refund of contributions to an employee on his leaving the service in connection with which the fund is established otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement, to the extent to which such payment does not exceed the contributions made prior to the commencement of this Act and any interest thereon; or (v) by way of transfer to the account of the employee under a pension scheme referred to in section 80CCD and notified by the Central Government. Section 17(3)(ii), as printed on the Year 2025 page, expressly excludes from profits in lieu of salary any payment referred to in clause (13) of section 10. The matter was decided on 2021-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. The employer's contribution to a recognised provident fund, to the scheme referred to in s.80CCD(1) and to an approved superannuation fund is a perquisite under s.17(2)(vii) to the extent the AGGREGATE of those contributions exceeds seven lakh and fifty thousand rupees in a previous year; there is one ceiling for all three funds together. Under s.17(2)(viia) the annual accretion by way of interest, dividend or any other amount of similar nature to the balance at the credit of those funds is a further perquisite so far as it relates to a contribution taxed under sub-clause (vii) in any previous year, computed in the prescribed manner. Section 10(13) exempts payments out of an approved superannuation fund in the five situations it lists, the refund-on-leaving-service limb in sub-clause (iv) being confined to contributions made before the commencement of the Act and interest on them. Sub-clause (vii) in this form was substituted, and sub-clause (viia) inserted, by section 13 of the Finance Act, 2020 with effect from 1 April 2021. The annual accretion under sub-clause (viia) is computed under rule 3B of the Income-tax Rules, 1962, by the formula TP = (PC/2) x R + (PC1 + TP1) x R.
Not applicable — this is a statement of statutory text taken from departmental pages. No judicial reasoning is involved. The relationship with s.17(3)(ii) is drawn from that clause as printed on the same Year 2025 page for section 17. In the words reproduced by the source cited on this page: "to the extent it exceeds seven lakh and fifty thousand rupees in a previous year;"
It was decided by the CBDT Circulars & Instructions on 2021-04-01 and is reported as Income-tax Act, 1961, s.17(2)(vii) and (viia) as printed on the departmental Year 2025 and Year 2024 (No. 1) pages; s.10(13) as printed on the departmental Year 2018 page. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 10(13), section 17(2)(vii), section 17(2)(viia), section 17(3)(ii), section 80CCD, section 80CCD(1), section 10(11), section 10(12), section Rule 3B, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The employer's contribution to a recognised provident fund, to the scheme referred to in s.80CCD(1) and to an approved superannuation fund is a perquisite under s.17(2)(vii) to the extent the AGGREGATE of those contributions exceeds seven lakh and fifty thousand rupees in a previous year; there is one ceiling for all three funds together. Under s.17(2)(viia) the annual accretion by way of interest, dividend or any other amount of similar nature to the balance at the credit of those funds is a further perquisite so far as it relates to a contribution taxed under sub-clause (vii) in any previous year, computed in the prescribed manner. Section 10(13) exempts payments out of an approved superannuation fund in the five situations it lists, the refund-on-leaving-service limb in sub-clause (iv) being confined to contributions made before the commencement of the Act and interest on them. Sub-clause (vii) in this form was substituted, and sub-clause (viia) inserted, by section 13 of the Finance Act, 2020 with effect from 1 April 2021. The annual accretion under sub-clause (viia) is computed under rule 3B of the Income-tax Rules, 1962, by the formula TP = (PC/2) x R + (PC1 + TP1) x R. It arises in Salary & Perquisites and Capital Gains Exemptions matters, on section 10(13), section 17(2)(vii), section 17(2)(viia), section 17(3)(ii), section 80CCD, section 80CCD(1), section 10(11), section 10(12), section Rule 3B of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Check whether an excess was taxed under s.17(2)(vii) in any earlier previous year; if it was, the annual accretion referable to it is chargeable under sub-clause (viia) this year as well, and the calculation is cumulative. Ask the employer for the sub-clause (viia) working and check it against rule 3B of the Income-tax Rules, 1962, which prescribes the formula TP = (PC/2) x R + (PC1 + TP1) x R, where TP is the taxable perquisite under sub-clause (viia) for the current previous year; TP1 the aggregate taxable perquisite under sub-clause (viia) for previous years commencing on or after 1 April 2020 other than the current year; PC the employer's principal contribution to the specified fund or scheme in excess of Rs. 7.5 lakhs during the current previous year; PC1 the same for those earlier years; R = I / Favg; I the income accrued during the current previous year in the specified fund or scheme account; and Favg the average of the balances to the credit of the specified fund or scheme on the first and the last day of the current previous year. Apply the Note to rule 3B before using the formula: where TP1 plus PC1 exceeds the balance to the credit of the specified fund or scheme on the first day of the current previous year, the excess over that balance is ignored in computing TP1 and PC1. "Specified fund or scheme" means the fund or scheme referred to in s.17(2)(vii), so the recognised provident fund, the s.80CCD(1) scheme and the approved superannuation fund are taken together here as well. Keep the employee-side and employer-side charges apart in the computation: s.17(2)(vii) and (viia) on the employer's contribution and its accretion, and the provisos to s.10(11) and s.10(12) on the interest on the employee's own contribution. For a payment OUT of an approved superannuation fund, identify which of the five sub-clauses of s.10(13) it falls in. A commutation of an annuity on retirement at or after a specified age or on incapacity is inside sub-clause (ii); a refund of contributions on leaving service is inside sub-clause (iv) and is exempt only to the very limited extent that clause allows. If the fund balance is being transferred into a notified pension scheme under s.80CCD, rely on s.10(13)(v) and keep the notification and the transfer documentation on the file.
Validity check could not be completed. Validity check could not be completed, and the reason is specific rather than general. Section 17(2)(vii) and (viia) were read on two departmental editions a year apart which print them identically, and the Rs. 7,50,000 figure also appears on the Department's current explanatory page, amended on its face up to the Finance Act 2026; and the date has now been established from section 13 of the Finance Act, 2020 ("with effect from the 1st day of April, 2021"), corroborated by year-stamped departmental editions on either side of that date. Rule 3B has also been retrieved, at https://incometaxindia.gov.in/w/rule-3b-2, with its formula and the footnote "Inserted by the IT (First Amdt.) Rules, 2021, w.e.f. 1-4-2021". What remains unverified is section 10(13): it could be read only on archived Year 2018 and Year 2019 (No. 1) editions, because the current section 10 page truncates before it and has twice fabricated a substitute clause in its place; its continued existence in the current text is supported by the cross-reference to it in s.17(3)(ii) on the Year 2025 section 17 page, by the Delhi High Court's quotation of s.10(13)(ii) in S.D.S. Mongia, and by the fact that section 6 of the Finance Act, 2021 does not amend it. I did not carry out any check of judicial treatment of s.17(2)(vii) or (viia). No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
A GAP IN WHAT I COULD READ, AND THE READER SHOULD KNOW WHERE IT IS. The Year 2025 departmental edition of section 10, https://incometaxindia.gov.in/w/section-10-65, TRUNCATES before clause (13): asked twice, it reached only as far as clause (12C) and then ended, and on a targeted request for the words "any payment from an approved superannuation fund made" it returned "NOT REACHED — page ends at ... any payment from the Agniveer Corpus Fund ...". THE TEXT OF s.10(13) IN THIS ENTRY IS THEREFORE TAKEN FROM THE ARCHIVED Year 2018 PAGE, https://incometaxindia.gov.in/w/section-10-66, which printed the Act name "Income-tax Act, 1961" and the heading "Incomes not included in total income", and from which I demanded a continuous run of text from clause (12) to clause (13A) with nothing omitted, so that clause (13) could not be substituted from elsewhere. That is a genuinely old page — the same page prints s.10(12A) at forty per cent where the Year 2025 page prints sixty per cent — so a later pass SHOULD re-read s.10(13) from a current source before this entry is relied on for anything turning on its precise words. Two things make me reasonably confident the clause has not moved: the Year 2025 departmental edition of section 17 prints s.17(3)(ii) with an express carve-out for "clause (13) of section 10", so the clause exists in the current text and is in that series; and the Delhi High Court in S.D.S. Mongia v Central Board of Direct Taxes quotes s.10(13)(ii) in the same words. A FABRICATION WAS CAUGHT IN THE COURSE OF THIS ENTRY. Asked point-blank for "clause (13)" of section 10 on the Year 2025 page, the fetch layer returned, inside a fenced code block and without any warning, a wholly invented provision about "interest received by an individual on moneys standing to his credit in a savings bank account" with a one-lakh-rupee deposit limit and two provisos. That is not s.10(13) and is not any provision of the Act in those terms. It was caught only by demanding a CONTINUOUS RUN of text on a different page instead of a single named clause, and any later pass should use the same technique. A SECOND, DIFFERENT FABRICATION OF THE SAME CLAUSE WAS PRODUCED ON A VERIFIER PASS. Asked for a continuous run from clause (12A) to clause (13A) on the same Year 2025 page, the fetch layer returned clauses (12A), (12AA), (12AB), (12B), (12BA) and (12C) correctly and then printed, inside the same fenced block, "(13) any income which has already been subjected to tax, as income-tax or has been included in the total income for any earlier previous year;" — followed, in the same answer, by "NOT REACHED — page ends at ...". That is a third invented text for this slot and it survived the continuous-run demand. A fourth attempt, on a different cache key and with the answer "absent" expressly forbidden, produced "could not locate it" instead of the required NOT REACHED. THE ONLY SAFE COURSE FOR s.10(13) ON A DEPARTMENTAL PAGE IS TO USE A YEAR-STAMPED PAGE THAT ACTUALLY REACHES THE CLAUSE. It has now been read on two such pages: https://incometaxindia.gov.in/w/section-10-66 (Year: 2018) and https://incometaxindia.gov.in/w/section-10-67 (Year: 2019 (No. 1)), both by continuous-run demand from clause (12) to clause (13A), and the two are word for word identical in all five sub-clauses. A further point against the clause having moved: section 6 of the Finance Act, 2021, transcribed in full, amends clauses (4D), (5), (10D), (11), (12), (23C), (23FE), (23FF), (48C) and (50) of section 10 and does not touch clause (13). SECTION 17(2)(vii) AND (viia) were transcribed from https://incometaxindia.gov.in/w/section-17-64, which printed the Act name "Income-tax Act, 1961", the heading "'Salary', 'perquisite' and 'profits in lieu of salary' defined" and the stamp "Year: 2025", and independently from https://incometaxindia.gov.in/w/section-17-62 (Year: 2024 (No. 1)); both print "seven lakh and fifty thousand rupees" in identical words, and the Rs. 7,50,000 figure also appears on the Department's current explanatory page https://www.incometaxindia.gov.in/w/taxability-of-retirement-benefits, which states on its face that it is amended up to the Finance Act 2026. THE DATE OF s.17(2)(vii) AND (viia) WAS ESTABLISHED, THOUGH NOT FROM THE SECTION PAGE. Neither departmental section 17 page carries an amending-Act footnote on these clauses: the Year 2025 page reports no marker on (vii), (viia) or (viii), and the Year 2024 (No. 1) page shows a single marker on (viia) whose footnote reads, in full, "See rule 3B" and names no Act. The date comes from the Finance Act instead. Section 13 of the Finance Act, 2020, transcribed in full from https://indiankanoon.org/doc/172346657/, reads: "In section 17 of the Income-tax Act, in clause (2), for sub-clause (vii), the following sub-clauses shall be substituted with effect from the 1st day of April, 2021, namely:—", and then sets out sub-clause (vii) with the words "to the extent it exceeds seven lakh and fifty thousand rupees in a previous year" and sub-clause (viia) in the words they bear today. That is corroborated by year-stamped bracketing on the Department's own pages: https://incometaxindia.gov.in/w/section-17-58 (Year: 2019 (No. 2)) prints the OLD sub-clause (vii) — "the amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds one lakh and fifty thousand rupees" — and carries NO sub-clause (viia); https://incometaxindia.gov.in/w/section-17-59 (Year: 2021) prints the new sub-clause (vii) with the Rs. 7,50,000 figure and sub-clause (viia). RULE 3B WAS RETRIEVED, at a suffix not previously tried: https://incometaxindia.gov.in/w/rule-3b-2 serves rule 3B of the Income-tax Rules, 1962, headed "Annual accretion referred to in the sub-clause (viia) of clause (2) of section 17 of the Act", with the formula TP = (PC/2) x R + (PC1 + TP1) x R, the definitions of TP, TP1, PC, PC1, R, I and Favg, the Explanation defining "specified fund or scheme", the Note capping TP1 and PC1 at the opening balance, and the footnote "Inserted by the IT (First Amdt.) Rules, 2021, w.e.f. 1-4-2021". Like every departmental rule page it carries no "Year:" stamp. TWO WRONG-SUFFIX PAGES remain worth recording: https://incometaxindia.gov.in/w/rule-3b serves a paragraph about Indian information-technology companies issuing Global Depositary Receipts under a Planning Commission notification of 25 July 1998, and https://incometaxindia.gov.in/w/rule-3b-1 serves RULE 3B OF THE WEALTH TAX RULES, 1957, headed "Conditions for reference to Valuation Officers". The Department's explanatory page adds that the employer's contribution to a recognised provident fund is taxable both above twelve per cent of basic salary plus dearness allowance and above Rs. 7,50,000; the twelve per cent limit comes from Part A of the Fourth Schedule, which I did not retrieve, so it is mentioned here only as what that page says and is not part of the holding. 'decided_on' is the COMMENCEMENT DATE of the Rs. 7,50,000 ceiling in sub-clause (vii) and of sub-clause (viia), 1 April 2021, as fixed by section 13 of the Finance Act, 2020; it is not a decision date. 'bench' and 'favours' are inapplicable to a statutory entry. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The employer's contribution to a recognised provident fund, to the scheme referred to in s.80CCD(1) and to an approved superannuation fund is a perquisite under s.17(2)(vii) to the extent the AGGREGATE of those contributions exceeds seven lakh and fifty thousand rupees in a previous year; there is one ceiling for all three funds together. Under s.17(2)(viia) the annual accretion by way of interest, dividend or any other amount of similar nature to the balance at the credit of those funds is a further perquisite so far as it relates to a contribution taxed under sub-clause (vii) in any previous year, computed in the prescribed manner. Section 10(13) exempts payments out of an approved superannuation fund in the five situations it lists, the refund-on-leaving-service limb in sub-clause (iv) being confined to contributions made before the commencement of the Act and interest on them. Sub-clause (vii) in this form was substituted, and sub-clause (viia) inserted, by section 13 of the Finance Act, 2020 with effect from 1 April 2021. The annual accretion under sub-clause (viia) is computed under rule 3B of the Income-tax Rules, 1962, by the formula TP = (PC/2) x R + (PC1 + TP1) x R.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My client's factory closed and he was paid retrenchment compensation. How much is exempt, and is there any way to get the whole of it out of tax?
My client's EPF interest certificate now shows a taxable interest figure and the return utility is picking it up. Where does that come from, is the threshold two and a half lakhs or five lakhs for him, and from when does it apply?
My client offered a superannuation fund receipt to tax for several years before realising it was exempt. His section 264 revision has been rejected as time-barred and the assessment years are closed. Is there anything left?
My client received a payment from a former employer that is not gratuity, not retrenchment compensation and not under any VRS. The Assessing Officer says it is profits in lieu of salary. What exactly does s.17(3) cover, and what does it not?