Income Deemed to be received
The following incomes shall be deemed to be received in the previous year:—
|(i)||the annual accretion in the previous year to the balance at the credit of an employee participating in a recognized provident fund, to the extent provided in rule 6 of Part A of the Fourth Schedule ;|
|(ii)||the transferred balance in a recognized provident fund, to the extent provided in sub-rule (4) of rule 11 of Part A of the Fourth Schedule ;|
|[(iii)||the contribution made, by the Central Government [or any other employer] in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD.]|
As per Section 7 clause (i) & Rule 6 of Part A of the fourth schedule,
- any contribution made by an employer to the recognized provident fund which is more than 12 % of the salary and
- interest credited to the balance which is calculated at the interest at the rate more than 9.5% p.a. Read the Notification no 24 of 2011
shall be income, deemed to be received in the previous year, and shall be charged under head salary.
Clause (ii) of Section 7 was applicable at the time of the introduction of Schedule IV that was in 1961 concerning the conversion of unrecognized provident fund to recognised provident fund.
Clause (iii) of Section 7 was inserted by the Finance Act, 2004, taxing the total amount contributed by the central government to the account of an employee under the pension scheme. Furthermore, 80CCD was introduced, which provides a deduction of such contribution made by the central government up to 10% of the salary (Basic plus dearness allowance).
Section 7 is for charging the additional contribution made by the employer to the provident fund or the pension scheme more than the limits prescribed.