1009. Whether in case of a provident fund, whose income is exempt under section 10(25)(ii), established under scheme under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, income by way of interest on securities of Central and State Governments may be paid to such provident funds without deduction of income-tax at source
Circular No. 741 was issued by the Central Board of Direct Taxes on 18 April 1996. Its subject is 1009. Whether in case of a provident fund, whose income is exempt under section 10(25)(ii), established under scheme under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, income by way of interest on securities of Central and State Governments may be paid to such provident funds without deduction of income-tax at source.
This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.
Allows interest on Central and State Government securities to be paid without deduction of tax at source to a provident fund established under a scheme framed under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 whose income is exempt under section 10(25)(ii). The relief is stated to apply from the financial year 1995-96 onwards.
Representations had been received seeking exemption from deduction under section 193 on interest on securities paid to such provident funds, whose income is in any event exempt.
1009. Whether in case of a provident fund, whose income is exempt under section 10(25)(ii), established under scheme under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, income by way of interest on securities of Central and State Governments may be paid to such provident funds without deduction of income-tax at source
1. Representations have been received for grant of exemption from the requirement of deduction of income-tax at source under section 193 of the Income-tax Act on the payment of income by way of interest on securities in case of provident funds established under a scheme framed under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 whose income is exempt under section 10(25)( ii) of the Income-tax Act, 1961.
2. The matter has been examined by the Board and it has been decided that in the case of a provident fund, whose income is exempt under section 10(25)(ii), established under a scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the income by way of interest on securities of Central and State Governments may be paid to such provident funds without deduction of income-tax at source. The provisions of this circular will be applicable from current financial year 1995-96 onwards.
Circular : No. 741, dated 18-4-1996.
When a paying institution asks a provident fund for authority not to deduct on Government security interest, or in a section 201 proceeding against such a payer.
Source: the Income Tax Department’s own published text — its page for this instrument.