277. Calculation of taxable interest relating to contribution in a provident fund or recognised provident fund, exceeding specified limit.–

(1) Taxable interest under Schedule II [Table: Sl. Nos. 3 and 4. C] to the Act shall be computed as the interest accrued in the taxable contribution account during the tax year.

(2) For the purpose of calculation of taxable interest under sub-rule (1), separate accounts within the provident fund account shall be maintained during the tax year 2021-2022 and all subsequent tax years for taxable contribution and non-taxable contribution made by a person.

(3) For the purposes of this rule,—

(a) non-taxable contribution account shall be the aggregate of the following:—

(i) closing balance in the account as on 31st March, 2021;

(ii) any contribution made by the person in the account during the tax year 2021-2022 and

subsequent tax years, which is not included in the taxable contribution account; and

(iii) interest accrued on sub-clauses (i) and (ii), as reduced by the withdrawal, if any, from such account;

(b) taxable contribution account shall be the aggregate of the following:—

(i) contribution made by the person in a tax year in the account during the tax year 2021-2022 and

subsequent tax years, which is in excess of the threshold limit; and

(ii) interest accrued on sub-clause (i), as reduced by the withdrawal, if any, from such account;

(c) "taxable interest" means the income by way of interest accrued during the tax year which is not exempt from inclusion in the total income of a person; and

(d) the threshold limit for the purposes of clause (b)(i) shall mean,–

(i) Rs 500000 where no contribution is made by the employer of such person; and

(ii) Rs 250000 in other cases.