The Department of Pension and Pensioners’ Welfare, Government of India, recently issued a significant clarification regarding the admissibility of interest on General Provident Fund (GPF) subscriptions exceeding the threshold of five lakhs. This memorandum, dated 02.05.2024, addresses concerns and provides guidance on the treatment of excess GPF contributions and the payment of interest thereon.
The memorandum elaborates on the provisions outlined in the General Provident Fund (Central Services) Rules, 1960, emphasizing that the GPF subscription should not be less than 6% of the emoluments nor exceed the total emoluments of the subscriber. Amendments to Rules 7, 8, and 10 of the GPF Rules, effective from 15.06.2022, introduced a threshold limit of five lakhs for GPF subscriptions, aligning it with Income Tax Rules.
Further, the Department issued instructions on 11.10.2022 and 02.11.2022 for the strict implementation of these amended provisions. However, references were received concerning the payment of interest on amounts exceeding five lakhs deducted towards GPF, subject to income tax deduction for the year 2022-23.
After reviewing the matter in consultation with the Ministry of Finance, it has been decided that government servants’ GPF subscriptions exceeding five lakhs in the year 2022-23 may accrue interest, subject to applicable income tax. This decision provides clarity on the treatment of excess GPF contributions and ensures compliance with income tax regulations.
3/6/2021-P&PW(F)
Government of India
Ministry of Personnel, P.G. and Pensions
Department of Pension and Pensioners’ Welfare
3rd Floor, Lok Nayak Bhawan,
Khan Market, New Delhi
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Office Memorandum No. 3/6/2021-P&PW(F) Dated: 02.05.2024
Subject: Clarification regarding admissibility of interest over and above the threshold limit of Rupees Five lakhs deducted towards GPF.
The undersigned is directed to say that in accordance with the General Provident Fund (Central Services), Rules, 1960, the amount of subscription to the GPF in respect of a subscriber, shall not be less than 6% of the emoluments and not more than total emoluments of the subscriber.
Subsequently, Rules 7, 8 & 10 of the General Provident Fund (Central Services) Rules, 1960 were amended vide Notification No. G.S.R. 96 dated 15.06.2022. As per the said Notification dated 15.06.2022, the sum of the monthly subscription by a subscriber under the GPF during a financial year together with the amount of arrear subscriptions deposited in that financial year shall not exceed the threshold limit (at present Rupees Five Lakh) referred to in sub clause (i) of clause (c) of the Explanation below sub rule (2) of the rule 9D of the Income Tax Rules, 1962 [as inserted vide Notification No. G.S.R. 604 (E) dated 31.08.2021 of Ministry of Finance, Department of Revenue (Central Board of Direct Taxes)].
2. Further, instructions were issued vide this Department’s OM No 3/6/2021-P&PW (F) dated 11.10.2022 and OM No. 3/13/2022-P&PW(F) dated 02.11.2022 for strict implementation of the above amended provisions of the General Provident Fund (Central Services), Rules, 1960.
3. References have been received in this department for payment of interest on the amount exceeding Rs.5.00 lakhs deducted towards GPF subject to deduction of Income tax for the year 2022-23. The matter for payment of interest on excess amount of Rs. 5.00 lakh towards GPF subscription has been reviewed again in consultation with Ministry of Finance and it has been decided that where the amount of total subscription towards GPF in the year 2022-23 in respect of a Government servant exceeds Rs. 5.00, the interest on the excess subscription may be paid, subject to applicable income tax.
4. All Ministries/Departments are requested that this revised provision may be
brought to the notice of the personnel dealing with the GPF matters in the Ministry/Department and attached/subordinate offices there-under for clarification and implementation.
5. This issues with the approval of competent authority.
(Dhrubajyoti Sengupta)
Joint Secretary
To
All Ministries/Departments of Government of India
(as per standard list)
