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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, where the accumulated balance of an employee in a recognised provident fund is included in total income because the exempting paragraph of Schedule XI does not apply, who computes the tax on it and how?

The Assessing Officer calculates the total of the various sums of tax as per paragraph 9 of Part A of Schedule XI. The accumulated balance is not simply added at slab rates in one year or taxed by the employer or trustees.

  1. AThe Assessing Officer calculates the total of the various sums of tax as per the provisions of paragraph 9 of Schedule XICorrect
  2. BThe employer deducts a flat tax and no assessment is needed
  3. CThe employee computes it at the normal slab rates on the full balance in one year
  4. DThe trustees of the fund compute it at the rate applicable to the fund

Explanation

The Act provides that when the accumulated balance is taxable because the exemption paragraph does not apply, the Assessing Officer calculates the total of the various sums of tax as per the provisions of paragraph 9. Hence the relief method is applied by the Assessing Officer, not a flat rate or a one-year slab computation.

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