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Business
Arrears of salary
Teachers in colleges have been awarded UGC scale of pay with arrears from January 1, 1996 up to March 31, 2003 along with interest but in instalments at 40 per cent in 1999 and the balance by the year ending March 31,
2003. The balance amount is said to have been kept in general provident fund account, but not credited to individual account now returned/ deposited with interest. What is the treatment to be given to interest?
Any amount credited to any provident fund account, whether recognised provident fund constituted by the employer or public provident fund, it is only interest which accrues from provident fund account that will be exempt.
It is not clear whether any amount was credited at all by the employer to any individual account. Interest now returned or deposited in provident fund account for delayed payment of arrears will be taxable.
Such amount should be taxable as part of remuneration since it is part of pay package arising out of employment assessable as salary as and when it is received. Tax will be deductible at source at the time of payment.
S. RAJARATNAM
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