# Income Deemed to be Received in India [Section 7]

Some amounts are treated as received in India even if the assessee does not actually get cash in hand. These are taxed under the receipt principle (and so are taxable for ROR, RNOR and NR alike).

## Incomes Deemed Received

1. Annual accretion to Recognised Provident Fund (RPF):

Employer's contribution in excess of 12% of salary to the RPF, and
Interest credited in excess of 9.5% p.a.

2. Transferred balance — Amount transferred from an Unrecognised PF to a Recognised PF (being the employer's contribution and interest thereon).

3. Employer's contribution under a pension scheme — Contribution by the Central Government or any other employer in the previous year under a pension scheme referred to in Section 80CCD.

Worked example

### Example 1

Example — Excess RPF contribution: Employer contributes 15% of salary to an RPF. The excess of 3% (15% − 12%) is deemed received and taxed. If interest is credited at 11%, the excess 1.5% (11% − 9.5%) is also deemed received.

### Example 2

Example — URPF to RPF transfer: When an unrecognised PF is converted/transferred into a recognised PF, the employer's contribution plus interest thereon is deemed received in that year.

⚠️ Common exam mistakes

Applying the 12% / 9.5% limits to the employee's own contribution — they apply to EMPLOYER contribution and credited INTEREST respectively.
Forgetting that these deemed receipts are taxable even for a Non-Resident (receipt principle).
Omitting the Section 80CCD employer pension contribution from deemed receipts.

Bare-Act text Section 7 · Income-tax Act, 1961 · click to expand

Section 7: The following incomes shall be deemed to be received in the previous year:— (i) the annual accretion in the previous year to the balance at the credit of an employee participating in a recognised provident fund, to the extent provided in rule 6 of Part A of the Fourth Schedule; (ii) the transferred balance in a recognised provident fund, to the extent provided in sub-rule (4) of rule 11 of Part A of the Fourth Schedule; (iii) the contribution made, by the Central Government or any other employer in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD.

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Income Deemed to be Received in India — Section 7

Worked example

⚠️ Common exam mistakes