Schedule II explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Serial numbers 3 to 17 of the Table in Schedule II to the Income-tax Act, 2025 list receipts that are not included in total income when the conditions in column C are met. They cover provident fund payments, the National Pension System Trust, the Agniveer Corpus Fund, approved superannuation funds, scholarships, awards, certain securities and bonds, and Unified Pension Scheme receipts. Serial numbers 1 and 2 (agricultural income and life insurance) are in our note on Schedule II, serial numbers 1 and 2.
This explanation is as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026. Under section 1(3) the Act came into force on the 1st April, 2026, save as otherwise provided. Later amendments, rules and notifications should be checked. For where the earlier Act's provisions on exempt income sit in the 2025 Act, see our mapping note on exemptions and the Schedules.
Schedule II (brought in by section 11) says the income in column B is not included in total income, subject to the conditions in column C. At serial numbers 3 and 4 the interest on large provident fund contributions is not excluded: the limits printed are Rs. 5,00,000 (no employer contribution) and Rs. 2,50,000 (other cases). NPS payments are excluded up to 60% of the amount payable. Several rows say "Nil" or defer to a notification. For help applying these rows to your return, see income tax return filing.
Serial numbers 3 and 4: provident funds
| Serial number | Income not to be included in total income | Conditions |
|---|---|---|
| 3 | Any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies, or from any other provident fund set up by the Central Government and notified by it in this behalf | (a) The income by way of interest accrued during the tax year is not eligible for exclusion where (i) it is attributable to the contribution (including aggregate thereof) made by that person on or after the 1st April, 2021, and (ii) such contribution exceeds (A) Rs. 5,00,000 in a tax year in such fund where no contribution is made by the employer of that person, or (B) Rs. 2,50,000 in other cases; and (b) the amount of income not to be excluded is computed in such manner as may be prescribed |
| 4 | The accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in paragraph 8 of Part A of Schedule XI | (a) The income by way of interest accrued during the tax year is not eligible for exclusion where (i) it is attributable to contribution (including aggregate thereof) made by that person on or after the 1st April, 2021, and (ii) such contribution exceeds (A) Rs. 5,00,000 in a financial year in such fund where no contribution is made by the employer of that person, or (B) Rs. 2,50,000 in other cases; and (b) computed in such manner as may be prescribed |
Two points follow from the text. First, the payment is excluded, but the interest accrued on contributions beyond the limits is carved out of the exclusion. Second, the way of computing the carved-out amount is left to the Income-tax Rules, 2026 and is not in the text consulted. Serial number 3 speaks of "a tax year" and serial number 4 of "a financial year" for the limit; the difference is quoted as printed. For paragraph 8 of Part A of Schedule XI, see our note on Schedule XI, Part A, paragraphs 7 to 14.
Serial numbers 5 to 7
| Serial number | Income not to be included in total income | Conditions |
|---|---|---|
| 5 | Any payment from any account opened as per the Sukanya Samriddhi Account Scheme, 2019 made under the Government Savings Promotion Act, 1873 (5 of 1873) | Nil |
| 6 | Any payment from the National Pension System Trust | (a) Such payment is on closure of the account of the assessee or on his opting out of the pension scheme referred to in section 124; and (b) the payment does not exceed 60% of the total amount payable at the time of such closure or opting out |
| 7 | Any payment from the Agniveer Corpus Fund to a person enrolled under the Agnipath Scheme or to his nominee | Nil |
Note 2 says that for serial number 7 the expressions "Agniveer Corpus Fund" and "Agnipath Scheme" have the meanings assigned in section 125. The pension scheme in serial number 6 is the one in section 124.
Serial number 8: approved superannuation fund
Column B: any payment from an approved superannuation fund. Column C: the payment is made:
- (a) on the death of a beneficiary;
- (b) to an employee in lieu of, or in commutation of, an annuity on his retirement at or after a specified age or on his becoming incapacitated before such retirement;
- (c) by way of refund of contributions on the death of a beneficiary;
- (d) by way of refund of contributions to an employee on his leaving the service in connection with which the fund is established otherwise than by retirement at or after a specified age or on becoming incapacitated before retirement, to the extent the payment does not exceed the contributions made before the commencement of the Act and any interest thereon; or
- (e) by way of transfer to the account of the employee under a pension scheme referred to in section 124 and notified by the Central Government in this behalf.
Approved superannuation funds are in our note on Schedule XI, Parts B and C.
Serial numbers 9 to 14
| Serial number | Income not to be included in total income | Conditions |
|---|---|---|
| 9 | Scholarships | Such scholarship is granted to meet the cost of education |
| 10 | Any payment made, whether in cash or in kind, for any award or reward | Such payment is made (a) in pursuance of any award instituted in the public interest by the Central Government or any State Government, or instituted by any other body and approved by the Central Government in this behalf; or (b) as a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in public interest |
| 11 | Income by way of interest, premium on redemption or other payment on such securities, bonds, annuity certificates, savings certificates, other certificates issued by the Central Government and deposits | Such certificates and deposits are notified by the Central Government, subject to such conditions and limits as specified therein |
| 12 | Interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 or deposit certificates issued under the Gold Monetisation Scheme, 2015 notified by the Central Government | Nil |
| 13 | Interest on bonds issued by a local authority or by a State Pooled Finance Entity | As specified by the Central Government, by notification |
| 14 | Any income arising from the transfer of a capital asset, being a unit of the Unit Scheme, 1964 referred to in Schedule I to the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) | The transfer of such asset takes place on or after the 1st April, 2002 |
Printing slip: serial number 9 is printed "9 Scholarships." without a full stop after the number. It is not corrected. Notes 3 and 4: for serial number 11, "interest" includes hedging transaction charges on account of currency fluctuation; for serial number 13, "State Pooled Finance Entity" means such entity set up as per the guidelines for the Pooled Finance Development Scheme notified by the Central Government in the Ministry of Housing and Urban Affairs. What has been notified under serial numbers 11, 12 and 13 is not in the text consulted.
Serial numbers 15 to 17
| Serial number | Income not to be included in total income | Conditions |
|---|---|---|
| 15 | Any payment from the National Pension System Trust received by an assessee who is a subscriber to the Unified Pension Scheme | (a) Such payment is received at the time of his superannuation or voluntary retirement or retirement under rule 56(j) of the Fundamental Rules ; and (b) the payment does not exceed 60% of the Individual corpus, as defined in notification number FX-1/3/2024-PR of the Department of Financial Services, dated the 24th January, 2025 |
| 16 | Any sum received as "lump sum amount" from the National Pension System Trust by an assessee being a subscriber to the Unified Pension Scheme | The "lump sum amount" is as per clause (vi) of Para 2 of the Notification number FX-1/3/2024-PR of the Department of Financial Services, dated the 24th January, 2025 |
| 17 | Any income covered under section 10(15)(iii) or (15)(iv)(c), (15)(iv)(d), (15)(iv)(e), (15)(iv)(f), (15)(iv)(g) or (15)(iv)(h) or (36) of the Income-tax Act, 1961 (43 of 1961) | Nil, subject to the conditions as provided therein |
At serial numbers 15 and 16 the Act itself refers to a notification of the Department of Financial Services; the reference is quoted as printed and the notification is not in the text consulted. At serial number 17 the Act names sections of the Income-tax Act, 1961; they are quoted as printed and nothing more is said about them.
A worked example (names and amounts assumed)
Mr. Imtiaz contributes to a provident fund to which the Provident Funds Act, 1925 applies; his employer makes no contribution. In a tax year he contributes Rs. 6,00,000 (assumed) and the interest accrued is Rs. 54,000 (assumed). He also closes an NPS account where the total amount payable is Rs. 10,00,000 (assumed) and receives Rs. 6,00,000.
- Provident fund: where no employer contributes, the limit is Rs. 5,00,000 (serial number 3, condition (a)(ii)(A)). His contribution of Rs. 6,00,000 exceeds it by Rs. 1,00,000, so interest attributable to the excess is not eligible for exclusion. How much of the Rs. 54,000 that is must be computed in the manner prescribed (condition (b)); the Act prints no formula here, so no figure is given.
- NPS: the limit is 60% of Rs. 10,00,000 = Rs. 6,00,000. The payment of Rs. 6,00,000 does not exceed it, so condition (b) of serial number 6 is met; condition (a) requires that the payment is on closure of the account or on his opting out of the pension scheme in section 124, which is the assumed case.
Need help with these receipts in your return?
Provident fund interest, NPS withdrawals, scholarships and notified bonds each have their own conditions, and several depend on notifications or prescribed methods. Our income tax return filing team can go through your receipts and the conditions that apply.
Key takeaways
- Provident fund payments are excluded, but interest on contributions made on or after 1 April 2021 beyond Rs. 5,00,000 (no employer contribution) or Rs. 2,50,000 (other cases) is carved out (serial numbers 3 and 4).
- NPS payments on closure or opting out are excluded up to 60% of the total amount payable (serial number 6).
- Sukanya Samriddhi Account and Agniveer Corpus Fund payments carry the condition "Nil" (serial numbers 5 and 7).
- Scholarships must be granted to meet the cost of education (serial number 9).
- Several rows depend on notification: serial numbers 11, 12, 13, and for Unified Pension Scheme rows 15 and 16.
Read next
- Schedule II, serial numbers 1 and 2: agricultural income and life insurance receipts
- Schedule XI, Part A, paragraphs 7 to 14: accumulated balance of a recognised provident fund
- Section 124: deduction for contributions to the pension scheme
- Schedule I: exempt income
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.