Schedule XI of the Income-tax Act, 2025 is read with section 2(91) and carries the rules for recognised provident funds in Part A, approved superannuation and gratuity funds in Part B, and rule-making powers in Part C.
Provident, superannuation and gratuity fund rules are not in Schedules V to VII. Those three are exempt income lists read with section 11. The fund rules are in Schedule XI, read with section 2(91).
What Schedule XI contains
Schedule XI is one of the longest in the Act and it is organised into three Parts. Part A — recognised provident funds. Part B — approved superannuation funds and gratuity funds. Part C — the power to make rules for all three.
It is read with section 2(91), which is where the defined term sits. That is why the Schedule opens with its own definitions rather than relying on the general definition section.
Part A begins with an important carve-out: it does not apply to any provident fund to which the Provident Funds Act, 1925 applies. Government and statutory provident funds are therefore outside this Part.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026 because of the repeal and savings provision in section 536. The Schedule contents described here are taken from the Act as enacted, incorporating the corrigenda notified in the Gazette on 3 September 2025.
Where each provision actually sits
| Topic | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Recognised provident funds | Fourth Schedule, Part A | Schedule XI, Part A |
| Approved superannuation funds | Fourth Schedule, Part B | Schedule XI, Part B |
| Approved gratuity funds | Fourth Schedule, Part C | Schedule XI, Part B |
| Rule-making power for the funds | Fourth Schedule, Part D | Schedule XI, Part C |
| Employer contribution deduction | Section 36(1)(iv) and (v) | Section 29(1)(a) and (c) |
| Employee contribution and the due date | Section 36(1)(va) | Section 29(1)(e) |
| Employer contribution above ₹7,50,000 as perquisite | Section 17(2)(vii) | Section 17(1)(h) |
| Accretion in salary | Section 17(1)(viii) | Section 16(i) and (j) |
The three Parts
Part A — recognised provident funds, and who it does not cover
Paragraph 1 provides that Part A shall not apply to any provident fund to which the Provident Funds Act, 1925 applies. Paragraph 2 then defines the terms used: approving authority means the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner; employer means a person maintaining a provident fund for employees, being an HUF, company, firm or association of persons, or an individual carrying on a business or profession whose profits are assessable under the business head; employee means an employee participating in the fund, excluding a personal or domestic servant; and contribution means any sum credited by or on behalf of the relevant party.
Part B — approved superannuation and gratuity funds
Carries the conditions for approval, the obligations of the trustees, and the consequences of withdrawal of approval for approved superannuation funds and gratuity funds. Employer contributions to these funds are deductible under section 29(1)(a) and (c), and a contribution to an approved gratuity fund must be under an irrevocable trust for the exclusive benefit of employees.
Part C — the rule-making power
The power to make rules for provident funds, superannuation funds and gratuity funds. Much of the operational detail therefore sits in the Rules made under this Part rather than in the Schedule itself.
How the Schedule connects to salary taxation
Section 16(i) brings the annual accretion to a recognised provident fund balance into salary to the extent chargeable under paragraph 6 of Part A of Schedule XI, and section 16(j) brings in the transferred balance under paragraph 11(2) of that Part. Those two cross-references are the mechanism by which excess or non-qualifying provident fund amounts become taxable salary.
The employer and employee deduction rules
Section 29(1)(a) allows the employer's contribution to a recognised provident fund or approved superannuation fund, subject to prescribed limits. Section 29(1)(e) allows the employee's contribution only if credited to the employee's account in the fund by the due date under the relevant labour law — and expressly provides that section 37 shall not apply in determining that due date.
What Schedules V, VI and VII actually contain
Schedule V — income not to be included in the total income of investment funds, business trusts and their unit holders. Schedule VI — income not to be included for persons in an International Financial Services Centre or having income from one. Schedule VII — a list of persons not liable to pay income-tax on their total income, such as regimental funds of the armed forces.
Worked example
An employer's provident fund position for tax year 2026-27, where the labour law requires credit by the 15th of the following month and the section 263(1) return due date is 31 October 2027.
| Item | Amount | Deposited | Position |
|---|---|---|---|
| Employer's contribution to the recognised provident fund | ₹42,00,000 | 20 September 2027 | Deductible — section 37(3) allows payment up to the return due date |
| Employee's contribution deducted from salary | ₹42,00,000 | 20 September 2027 | Not deductible — section 29(1)(e)(ii) disapplies section 37 |
| Employer contribution across PF, section 124 scheme and superannuation | ₹9,00,000 aggregate | — | Excess over ₹7,50,000 is a perquisite — section 17(1)(h) |
| Annual accretion on the balance attributable to that excess | ₹9,000 | — | Perquisite — section 17(1)(i) |
The second row is the recurring, expensive error. Both halves were deposited on the same day, but only the employer's share is saved by section 37(3). The employee's ₹42,00,000 is permanently disallowed.
Compliance checklist
- Deposit the employee's share by the due date under the provident fund or ESI law, not by the income-tax return due date.
- Keep employer and employee shares separately identified in challans and records.
- Constitute an approved gratuity fund under an irrevocable trust for the exclusive benefit of employees.
- Aggregate employer contributions across the recognised provident fund, the section 124 scheme and the approved superannuation fund against ₹7,50,000.
- Read paragraph 6 and paragraph 11(2) of Part A of Schedule XI when computing taxable provident fund accretion under section 16(i) and (j).
- Note that Part A does not apply to funds governed by the Provident Funds Act, 1925.
- For the Rules, look to what is made under Part C of the Schedule.
Common mistakes
- Looking for provident fund rules in Schedules V to VII, which are exempt income lists.
- Depositing the employee's provident fund share by the return due date and expecting the deduction.
- Testing the ₹7,50,000 perquisite threshold fund by fund rather than in aggregate.
- Applying Part A to a fund governed by the Provident Funds Act, 1925.
- Overlooking that a personal or domestic servant is excluded from the definition of employee in Part A.
All sixteen Schedules of the Income-tax Act, 2025
Because the numbering is widely misquoted, the full list is reproduced below from the Act as enacted. Note that Schedules II to VII are all exemption lists, split by who is claiming rather than by what the income is.
| Schedule | Read with | Subject as enacted |
|---|---|---|
| I | section 9(12) | Conditions for certain activities not to constitute business connection in India |
| II | section 11 | Income not to be included in total income |
| III | section 11 | Income not to be included in total income of eligible persons |
| IV | section 11 | Income not to be included in total income of eligible non-residents, foreign companies and other such persons |
| V | section 11 | Income not to be included in total income of certain eligible persons including investment funds, business trusts and their unit holders |
| VI | section 11 | Income not to be included in total income of certain eligible persons in an International Financial Services Centre or having income therefrom |
| VII | section 11 | Persons exempt from tax |
| VIII | section 12 | Income not to be included in the total income of political parties and electoral trusts |
| IX | section 48 | Deduction for tea, coffee and rubber development accounts |
| X | section 49 | Deduction for Site Restoration Fund |
| XI | section 2(91) | Recognised provident funds, approved superannuation funds and approved gratuity funds |
| XII | section 51 | Minerals, and groups of associated minerals |
| XIII | section 45(2) | List of articles or things |
| XIV | section 55 | Insurance business |
| XV | section 123 | Deduction for life insurance premia, contribution to provident fund, subscription to certain equity shares, etc. |
| XVI | section 350 | Permitted modes of investment or deposits by a registered non-profit organisation |
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.