Notifications No. S.O. 225(E) dated 30th March, 1974, and S.O. 153(E) dated 25th March, 1975, issued under rule 6(b) of Part A of the Fourth Schedule to the Income-tax Act, 1961-Instructions regarding - Income Tax - 188/1976

Circular No. 188 Dated 16/1/1976 Subject: Notifications No. S.O. 225(E) dated 30th March, 1974, and S.O. 153(E) dated 25th March, 1975, issued under rule 6(b) of Part A of the Fourth Schedule to the Income-tax Act, 1961-Instructions regarding. Under rule 6(b) of Part A of the Fourth Schedule to the Income-tax Act, 1961, interest credited on the balance to the credit of an employee participating in a recognised provident fund is exempt from income-tax, to the extent it does not exceed one-third of the employee's salary for the relevant year or is not allowed at a rate exceeding that fixed by the Central Government in this behalf by notification in the Official Gazette. Under Notification No.S.O.225(E)1 dated 30th March, 1974, the rate of interest specified in this behalf was increased from 6 per cent. to 6.5 per cent. with effect from 1st April, 1974. Under Notification No.153 (E)2 dated 25th March, 1975, the rate of interest was further increased from 6.5 per cent. to 7.5 per cent. with immediate effect. 2. The Board are advised that a notification fixing the rate of interest issued under rule 6 of Part A of the Fourth Schedule of the Income-tax Act will have only prospective effect. In this view of the matter, the benefit of exemption from tax in respect of interest credited at the enhanced rates would be available only in respect of amounts credited to the individual account of employees on or after the date on which the relevant notification came into force. (Sd.) N.B. Singh, Under Secretary, Central Board of Direct Taxes.