The balance of Unrecognised Provident Fund (U.R.P.F.), which is transferred to Recognised Provident Fund R.P.F. is called “Transferred Balance”.
According to Schedule IV, rule 11(4), the amount of taxable portion of will be calculated as under:
(i) The fund will be treated as R.P.F. from the date fund was instituted.
(ii) The employer’s contribution of URPF shall qualify for exemption upto 12% of salary and excess shall be taxable.
(iii) The interest credited to the accumulated balance shall be exempted if rate of interest was upto 9.5%. Excess if any, is taxable.
(iv) The taxable amount under point (ii) and (iii) above shall be deemed to be the income of the previous year in which fund gets recognition. The remainder of the transferred balance shall be ignored.