Article
Taxability of interest on provident funds
By Samyak Navedia
The amendment by Finance Act, 2021 seeks to tax notional interest on Employee’s contribution to specified provident fund, exceeding the threshold limit made on or after 1 April 2021. Recently, the Income Tax Rules have been amended to lay down the manner of computation of taxability of interest. Considering various factors like absence of charge of tax, point of taxation and deduction of TDS, the author is of the opinion that this amendment is half baked in many ways. According to him, while it limits the tax exemption, it is severely lacking in creating both charging and machinery provisions that are necessary to ensure smooth procedure for assessees for an income that was hitherto granted blanket exemption. The article concludes by stating that it remains to be seen how judiciary interprets this new tax or if the legislature proactively removes all doubts by promulgating specific provisions, similar to those that exist for the employer’s contributions towards provident fund account of employees...
Notifications & Circulars
- Form No. 52A for production of cinematograph revised
- No TDS under Section 194-O will be made applicable to E-auction services
Ratio decidendi
- BCCI cannot be denied income tax exemption because Indian Premier League (IPL) makes profits – ITAT Mumbai
- ITAT cannot recall its order by invoking power under Section 254(2) of the Income-tax Act – Supreme Court
- Educational institute is eligible for exemption under Section 11 based on registration of its parent society – ITAT Lucknow
- Credit of tax deducted at source but not deposited by the employer, available – Gujarat High Court
- Registration as charitable trust when cannot be cancelled – Amendment of Trust Deed, not contrary to charitable objects not relevant – Karnataka High Court
