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CS Executive · Tax Laws and Practice · Computation of Total Income and Tax Liability of various Entities

Under the Income-tax Act, 2025 (applicable from the June 2027 session), section 191 deals with the tax on the accumulated balance of a recognised provident fund. When does this section apply to an employee?

Section 191 applies when the accumulated balance of a recognised provident fund is included in the employee's total income because paragraph 8 of Part A of Schedule XI is not applicable. In that case the tax is computed under paragraph 9 by the Assessing Officer.

  1. AWhen the accumulated balance is included in the employee's total income because paragraph 8 of Part A of Schedule XI is not applicableCorrect
  2. BWhen the employee contributes to an unrecognised provident fund
  3. CWhen the employee withdraws only the interest credited for the year
  4. DWhen the employer makes a contribution exceeding the prescribed limit in a year

Explanation

Section 191 operates where the accumulated balance due to an employee in a recognised provident fund is included in total income because paragraph 8 of Part A of Schedule XI does not apply. The Assessing Officer then computes tax as per paragraph 9. The other options describe situations outside the text of this section.

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