Calculation of Income Tax on Interest of GPF on contribution above Rs. 5 Lakhs during FY 2021-22

Increased limit for tax exemption on leave encashment for non-govt salaried employees to Rs. 25 lakh w.e.f. 01.04.2023

Calculation of Income Tax on Interest of GPF on contribution above Rs. 5 Lakhs during financial year 2021-22

Defence Accounts Department (DAD) Headquarters
Ulan Batar Road, Palam, Delhi Cantt — 110010


Dt 18/02/2022

The CDA(Fund) Meerut
PCDA(O) Pune
All Regional PCsDA/CsDA

Subject: Calculation of Income Tax on Interest of GPF- Regarding.

Please refer 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.

2. The provisions of notification and action there of:

(i) Exercising the powers conferred by the first proviso to clause(11) of section 10 and first proviso to clause(12) of section 10 read with section 295 of the Income-Tax Act, 1961(43 of 1961), the CBDT has inserted a Rule 9D namely Income-tax(25th Amendment) Rule 2021 after Rule 9C of Income-tax Rule 1962 which stipulates Calculation of taxable interest relating to contribution in a provident fund or recognized provided fund, exceeding specified limit of Rs. 5 Lakhs.,

(ii) The interest earned on contribution above Rs. 5 Lakhs during FY 2021-22 should be treated as income from other sources for the FY 2021-22(AY 2022-23) and income tax should be deducted from salary paid during the FY 2021-22 itself. Same should be reflected in Form-16 of FY 2021-22(AY 2022-23) accordingly.

(iii) Action on the part of DDO & Fund manager: Deduction of tax will be done by DDO in consultation with fund manager and where Fund manager and DDO are separate bodies the Fund manager will calculate the interest earned on contribution as per ibid rules and inform the DDO for adjustment of tax deduction from the salary of concerned individual

The CBDT notification mentioned above may be implemented wef 01 April 2022.

This issues with the approval of Addl. CGDA.

Encl: As above

AO (Pay & Allowances)

Source: CGDA

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