Income Tax on GPF Accumulation Beyond Threshold Limit – CGDA

In the financial year 2021-22, any contribution exceeding Rs. 5 Lakhs will be considered as income from other sources for the same fiscal year (AY 2022-23). As a result, income tax should be deducted from the salary paid within the Financial Year 2021-22.

• Contribution account – An account maintained within the provident fund of a person and a body corporate, which is intended to advance the funds necessary for retirement benefits of employees who opt for retirement in favour of the said body corporate.
• Exemption amount – An amount payable annually as an exemption from Income-Tax, by way of refund, in respect of certain contributions made after 31st March 1983, to the aforesaid accounts.

Office of Controller General of Defence Accounts
Ulan Batar Road, Palam, Delhi Cantt.- 110010

ABFU-4052/7/2020-PAYC-Part(1)

Dated: 27.02.2023.

To

All Regional PCSDA/CsDA
PCDA (QO) Pune
PCDA (Navy)
PCDA’s (AF)
CDA (IT&SDC) Sec’bad.
CDA (Fund) Meerut

Sub:- Income Tax on GPF accumulation – regarding.

Your kind attention is invited to the MoF Department of Revenue (CBDT)’s notification No. 95/2021/File No.370142/36/2021-TPL dated 31.08.2021 (copy enclosed) regarding deduction of Income tax on interest of GPF subscription over Rs. 5 Lakhs during the financial year 2021-22. The said notification has inserted a Rule 9 D after Rule 9C Rule 9 D states as under:-

Calculation of taxable interest relating to contribution in a provident fund or recognized provident fund, exceeding specified limit: –

(1) For the purpose of the first and second provisos to clauses (11) and (12) of section 10, income by way of interest accrued during the previous year which is not exempt from inclusion in the total income of a person under the said clauses (hereinafter in this rule referred to as the taxable interest) shall be computed as the interest accrued during the previous year in the taxable contribution account.

(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 previous year 2021-22 and all subsequent previous years for taxable contribution and non-taxable contribution made by a person.

2. As per the Notification the Taxable contribution account shall be the aggregate of (i) contribution made by the person in a previous year in the account during the previous year 2021-22 and subsequent previous years which is in excess of the threshold limit and (ii) the interest accrued on sub-clause (i) of the notification. The threshold limit shall mean Five lakh rupees, if the second proviso to clause (11) and (12) of section 10 is applicable.

3. Hence, it is enjoined upon all concerned to adhered to the above notification during calculation of Income tax on accumulation of GPF beyond threshold limit.

4. The instructions issued vide HQrs office letter No. AT/Army/BR/FC/4462/e-1754 dated 18.2.2022 may be amended accordingly.

This issues with approval of Sr. Jt. CGDA (Audit).

Sr. Accounts Officer (AT-VIII)

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