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Question

In Income tax the aggregate interest received in RPF is exempt upto 9.5 percentage.. But there is a more provision that the interest on employee contribution in excess of 250000 is taxable so how both of provisions can work together...... Please give with an example

Aditya · Answer

Harsh bro if this is the fact then it means assessee giving tax 2 times on same interest.. ( when accrued and when withdraw)

Harsh · Answer

You're getting confused between the two provisions. See, if interest accrual is more than 9.5% p.a., the excess is taxable under the head salary in the same year (this is clear to you, I guess), now for the second part- interest on employees contribution towards SPF and RPF is exempt u/s 10(12) and 10(11) when the amt. is withdrawn on retirement or termination, but if the contribution is made in excess of 2,50,000 such exemption is not available... To conclude, if accrual of interest exceeds 9.5%, such shall be taxable in the same year, but if the employee's contribution is in excess of 2,50,000 the accrual of interest over such excess amount would be taxable in the year of retirement or termination, whichever is earlier. I hope it's clear!

Aditya · Answer

Check the attachment

Aastha · Answer

Which provision provided max exemption 2.5L

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4 answers

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