Section 277 — Calculation of taxable interest relating to contribution in a provident fund or recognised provident fund, exceeding specified limit

(1) Taxable interest under Schedule II [Table: Sl. Nos. 3 and 4. C] to the Act shall be computed as the interest accrued in the taxable contribution accountduring the tax year.
(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 taxyear 2021-2022 and all subsequent tax years for taxable contribution and non-taxable contribution made by a person.
(3) For the purposes of this rule,—
(a) non-taxable contribution account shall be the aggregate of the following:—(i) closing balance in the account as on 31st March, 2021;(ii) any contribution made by the person in the account during the tax year 2021-2022 and subsequent tax years, which is not included in thetaxable contribution account; and(iii) interest accrued on sub-clauses (i) and (ii), as reduced by the withdrawal, if any, from such account;
(b) taxable contribution account shall be the aggregate of the following:—(i) contribution made by the person in a tax year in the account during the tax year 2021-2022 and subsequent tax years, which is in excess of thethreshold limit; and(ii) interest accrued on sub-clause (i), as reduced by the withdrawal, if any, from such account;
(c) "taxable interest" means the income by way of interest accrued during the tax year which is not exempt from inclusion in the total income of a person;and(d) the threshold limit for the purposes of clause (b)(i) shall mean,—(i) Rs. 5,00,000 where no contribution is made by the employer of such person; and(ii) Rs. 2,50,000 in other cases.