Ministry of Finance
Notification No. 11/2021 [F. No. 370142/52/2020-TPL] / GSR 155(E) was published on 5 March 2021. Its subject is Ministry of Finance.
This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.
The Income-tax (1st Amendment) Rules, 2021 insert a new rule 3B into the Income-tax Rules, 1962, after rule 3A. Rule 3B prescribes how to compute the annual accretion — by way of interest, dividend or any other amount of a similar nature — to the balance to the credit of a fund or scheme referred to in sub-clause (vii) of clause (2) of section 17, which is taxable as a perquisite under sub-clause (viia) of that clause. The taxable perquisite is computed by the formula TP = (PC/2)*R + (PC1 + TP1)*R, where PC is the employer's principal contribution in excess of Rs. 7.5 lakh made during the current previous year, PC1 and TP1 are the corresponding aggregates for previous years commencing on or after 1 April 2020 other than the current previous year, R is I divided by Favg, I is the income accrued during the current previous year in the specified fund or scheme account, and Favg is the average of the opening and closing balances of that fund or scheme for the current previous year.
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 5th March, 2021
G.S.R. 155(E).—In exercise of the powers conferred by sub-clause (viia) of clause (2) of section 17 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 (1st Amendment) Rules, 2021.
(2) They shall come into force from the 1st day of April, 2021.
2. In the Income-tax Rules, 1962, after the rule 3A, the following rule shall be inserted, namely: ‒
[भाग II—खण् ड 3(i)] भारत का रािपत्र : असाधारण 3
"3B. Annual accretion referred to in the sub-clause (viia) of clause (2) of section 17 of the Act.
For the purposes of sub-clause (viia) of clause (2) of section 17 of the Act, annual accretion by way of
interest, dividend or any other amount of similar nature during the previous year (hereinafter in this rule referred to as
the current previous year) to balance to the credit of the fund or scheme referred to in sub-clause (vii) of clause (2) of
section 17 of the Act shall be the amount or aggregate of amounts computed in accordance with the following
formula, namely:—
TP= (PC/2)*R + (PC1+ TP1)*R
Where,
TP= Taxable perquisite under sub-clause (viia) of clause (2) of section 17 of the Act for the current previous
year;
TP1 = Aggregate of taxable perquisite under sub-clause (viia) of clause (2) of section 17 of the Act for the
previous year or years commencing on or after 1st day April, 2020 other than the current previous year (See Note);
PC= Amount or aggregate of amounts of principal contribution made by the employer in excess of Rs. 7.5
lakh to the specified fund or scheme during the previous year;
PC1 = Amount or aggregate of amounts of principal contribution made by the employer in excess of Rs. 7.5
lakh to the specified fund or scheme for the previous year or years commencing on or after 1st day April, 2020 other
than the current previous year (See Note);
R= I/ Favg ;
I=Amount or aggregate of amounts of income accrued during the current previous year in the specified fund
or scheme account;
Favg = (Amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the first
day of the current previous Year + Amount or aggregate of amounts of balance to the credit of the specified fund or
scheme on the last day of the current previous year)/2.
Explanation. — For the purposes of this rule, "specified fund or scheme" shall mean a fund or scheme
referred to in sub-clause (vii) of clause (2) of section 17 of the Act.
Note: Where the amount or aggregate of amounts of TP1 and PC1 exceeds the amount or aggregate of amounts of
balance to the credit of the specified fund or scheme on the first day of the current previous year, then the
amount in excess of the amount or aggregate of amounts of the said balance shall be ignored for the purpose of
computing the amount or aggregate of amounts of TP1 and PC1.".
[Notification No. 11 /2021/F. No. 370142/52/2020-TPL]
GUDRUN NEHAR, Director (TPL-II)
Note: The principle rules were published in the Gazette of India, Extraordinary, Part II, Section 3,sub-section (ii) vide
notification number. S.O. 969 dated the 26th March, 1962 and lastly amended vide notification number
G.S.R. No. 664(E) dated the 22nd October, 2020.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.
| Rule of the 1962 Rules | Now, in the 2026 Rules |
|---|---|
| Rule 3B | rule 17 |
1 April 2021.
In the perquisite value shown in the salary computation and in tax deducted at source under section 192, and in the salary head of the employee's return of income.
An employer contributes Rs. 10 lakh in the current previous year, so PC is Rs. 2.5 lakh, being the excess over Rs. 7.5 lakh. If income accrued in the fund during the year is I and the average of the opening and closing balances is Favg, then R is I divided by Favg, and the taxable perquisite is (Rs. 2.5 lakh divided by two) multiplied by R, plus the sum of PC1 and TP1 for earlier years from 1 April 2020 multiplied by R.
Rules it names. Rule 3A of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
← Notification No. 12 /2021 [F.No. 203/13/2019/ITA-II] / SO 1069(E) · Notification No. 10/2021 [F.No.370142/35/2020-TPL] / S.O. 966(E) →
Source: the Income Tax Department’s own published text — its page for this instrument.
