INTEREST RECEIVED ON PAY COMMISSION ARREARS WHETHER TAXABLE
This query is : Resolved
20 February 2008
Dear members,
Some of my TAMILNADU GOVERNMENT EMPLOYEE clients (SALARY HOLDERS )have received Interest on Pay commission arrears in the assessment year 2008-2009.
The nature of the case is as follows
1) Government of tamilnadu declared Increment on salary to Government employees in the year 2000-01.
2) Since by that time there were no funds in the government treasury the arrear declared by the government was credited in to the G.P.F. account of the Employees. and the assessees claimed rebate u/s 88 for ascertaining their Taxable income.
3)FOR THE financial year ended 2001, and F.Y 2002 it was kept in G.P.F. Account.
4) For and from the F.Y. 2003 the arrear amount was excluded in the P.F. SLIP. and no interest was calculated from that year.
5) In the financial year 2007 TAMILNADU GOVERNMENT has released one portion 30% of that arrears from G.P.F. Account. (I have not considered this as a salary as it was refunded from G.P.F. account).
6) In 2008 Government released another 30% from G.P.F. account and also paid Interest for the previous years 2001-2007.
my querry is
A) whether am I claim interest is non taxable for the assessment year 2008-2009.
B) Whether the Principle is non taxable as it was invested in G.P.F. Account for the financial year 2000-2001. (NOW RECEIVED)
MEMBERS MAY CLARIFY to ascertain the proposed taxablity of my clients in this regard.
Regards,
AUDITOR SEKAR
sugavanamsekar@yahoo.com
Some of my TAMILNADU GOVERNMENT EMPLOYEE clients (SALARY HOLDERS )have received Interest on Pay commission arrears in the assessment year 2008-2009.
The nature of the case is as follows
1) Government of tamilnadu declared Increment on salary to Government employees in the year 2000-01.
2) Since by that time there were no funds in the government treasury the arrear declared by the government was credited in to the G.P.F. account of the Employees. and the assessees claimed rebate u/s 88 for ascertaining their Taxable income.
3)FOR THE financial year ended 2001, and F.Y 2002 it was kept in G.P.F. Account.
4) For and from the F.Y. 2003 the arrear amount was excluded in the P.F. SLIP. and no interest was calculated from that year.
5) In the financial year 2007 TAMILNADU GOVERNMENT has released one portion 30% of that arrears from G.P.F. Account. (I have not considered this as a salary as it was refunded from G.P.F. account).
6) In 2008 Government released another 30% from G.P.F. account and also paid Interest for the previous years 2001-2007.
my querry is
A) whether am I claim interest is non taxable for the assessment year 2008-2009.
B) Whether the Principle is non taxable as it was invested in G.P.F. Account for the financial year 2000-2001. (NOW RECEIVED)
MEMBERS MAY CLARIFY to ascertain the proposed taxablity of my clients in this regard.
Regards,
AUDITOR SEKAR
sugavanamsekar@yahoo.com
20 February 2008
send reply
21 February 2008
A)Please let us know whether the interest was credited to the GPF or directly given.
B)The following are exempt:
Any payment received from provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies or from any other provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette];the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule
B)The following are exempt:
Any payment received from provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies or from any other provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette];the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule
22 February 2008
If the interest is credited to GPF account and later released, then it would be exempted. If the interest is not credied to GPF account but paid separately, they the interest would be taxable.
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