Rule 9D

Rule 9D — the law in short

What the courts have decided on section Rule 9D, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.10(11) and s.10(12) with Rule 9D: interest on the employee's own provident fund contribution above the annual threshold, why there are TWO thresholds, and the two-account mechanism from previous year 2021-22 CBDT Circulars & InstructionsCuts both ways
  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?
  It comes from the two provisos added to each of s.10(11) and s.10(12). The exemption does not apply to interest accrued during the previous year on so much of the person's own contribution as exceeds two lakh and fifty thousand rupees in any previous year in that fund, made on or after 1 April 2021; and the second proviso substitutes five lakh rupees for that figure where the contribution is to a fund in which there is NO contribution by the employer. So an ordinary EPF member whose employer contributes is on the Rs. 2,50,000 threshold, and a member of a fund to which the employer does not contribute — the General Provident Fund pattern — is on the Rs. 5,00,000 threshold. The computation is prescribed by Rule 9D, which requires separate taxable and non-taxable contribution accounts to be maintained within the provident fund account during previous year 2021-22 and all subsequent previous years, and which was inserted by the Income-tax (Twenty-fifth Amendment) Rules, 2021 with effect from 1 April 2022. Both provisos were inserted by clause (d) of section 6 of the Finance Act, 2021, with effect from 1 April 2022, so they first bite in assessment year 2022-23 even though the contributions they reach are those made on or after 1 April 2021.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.