Rpf interest rate
This query is : Resolved
19 September 2011
interest rate exemption limit for recognized provident fund applicable for nov 2011
21 September 2011
w.e.f 1.09.2010 intrest credited to PF is exempt upto 8.5% p.a
Notification No. 69/2010 dated 26.08.2010
Notification of interest rate on RPF as 8.5% w.e.f. 1.9.2010, the interest in excess of which would be taxable as salary.
Rule 6 of Part A of the Fourth Schedule to the Income tax Act, 1961, provides, inter alia, that interest credited on the balance to the credit of an employee participating in a recognized provident fund in so far as it is allowed at a rate exceeding such rate notified by the Central Government, shall be deemed to have been received by the employee in the relevant previous year and shall be included in his total income.
Accordingly, the Central Government has notified, w.e.f. 1st September, 2010, in exercise of the powers conferred by Rule 6, 8.5% as the rate of interest on Employer’s annual contributions in a recognised provident fund. This implies that w.e.f. 1st September 2010 interest credited on the balance to the credit of the employee in excess of 8.5 percent shall be deemed to have been received by the employee in the previous year and shall be included in the total income of the employee. Prior to this date, the interest credited in excess of 9.5% was deemed to be the income of the employee.
Example : If interest @ 9.5% is credited in the provident fund account of the employee as on 31st March, 2011 for the year 2010-11, then, according to the above notification, the amount of interest credited upto 31.08.2010 (i.e. 9.5%) is exempt from tax and w.e.f 01.09.2010 the interest credited @ 1% (i.e. 9.5% - 8.5%) is deemed to be the income of the employee for A.Y.2011-12.
Notification No. 69/2010 dated 26.08.2010
Notification of interest rate on RPF as 8.5% w.e.f. 1.9.2010, the interest in excess of which would be taxable as salary.
Rule 6 of Part A of the Fourth Schedule to the Income tax Act, 1961, provides, inter alia, that interest credited on the balance to the credit of an employee participating in a recognized provident fund in so far as it is allowed at a rate exceeding such rate notified by the Central Government, shall be deemed to have been received by the employee in the relevant previous year and shall be included in his total income.
Accordingly, the Central Government has notified, w.e.f. 1st September, 2010, in exercise of the powers conferred by Rule 6, 8.5% as the rate of interest on Employer’s annual contributions in a recognised provident fund. This implies that w.e.f. 1st September 2010 interest credited on the balance to the credit of the employee in excess of 8.5 percent shall be deemed to have been received by the employee in the previous year and shall be included in the total income of the employee. Prior to this date, the interest credited in excess of 9.5% was deemed to be the income of the employee.
Example : If interest @ 9.5% is credited in the provident fund account of the employee as on 31st March, 2011 for the year 2010-11, then, according to the above notification, the amount of interest credited upto 31.08.2010 (i.e. 9.5%) is exempt from tax and w.e.f 01.09.2010 the interest credited @ 1% (i.e. 9.5% - 8.5%) is deemed to be the income of the employee for A.Y.2011-12.
22 September 2011
thank uuu sir for ur reply.
actually yesterday i've downloaded RTP for nov 2011 xms and the following notification no. 24/2011 was issued in supersession of ntf no. 69/2010 dated 26/8/10.
which states that interest rate limit for RPF is 9.5% irrespective of the date of credit of interest.
actually yesterday i've downloaded RTP for nov 2011 xms and the following notification no. 24/2011 was issued in supersession of ntf no. 69/2010 dated 26/8/10.
which states that interest rate limit for RPF is 9.5% irrespective of the date of credit of interest.
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