Section 111 of ITA, 1961 : Section 111: Tax On Accumulated Balance Of Recognised Provident Fund

Explanation using Example

Imagine an employee named Rohit who has been contributing to a recognised provident fund for several years. Due to certain conditions not being met, as outlined in rule 8 of Part A of the Fourth Schedule of the Income-tax Act, 1961, the accumulated balance in his provident fund account becomes taxable. When Rohit decides to withdraw this amount, the tax on this accumulated balance must be calculated. According to Section 111(1) of the Income-tax Act, the Assessing Officer will calculate the tax on the accumulated balance by following the method specified in sub-rule (1) of rule 9 of the Fourth Schedule.

In another scenario, if Rohit's accumulated balance in the provident fund becomes payable and it is not included in his total income due to the applicability of rule 8, the tax on this amount, referred to as super-tax, must be calculated in the manner provided in sub-rule (2) of rule 9, as stated in Section 111(2) of the Act.