Home / Income Tax / Sections 110 and 111

Sections 110 and 111 of Income Tax Act: Current Sections 190 and 191 Explained

Updated: 28 September 2026

Former Sections 110 and 111 of the Income-tax Act, 1961 dealt with two special tax-computation situations: income included in total income on which no income-tax is payable, and tax on the accumulated balance of a recognised provident fund. From 1 April 2026, the Income-tax Act, 2025 applies to Tax Year 2026-27 and later tax years, and these provisions are now principally found in Sections 190 and 191.

Important transition: The Income-tax Act, 1961 was repealed with effect from 1 April 2026, subject to transition and savings provisions. Tax years beginning before 1 April 2026 and proceedings relating to those earlier periods continue to be governed by the old law where the transition provisions so require. Therefore, Sections 110 and 111 remain relevant for legacy matters, while Sections 190 and 191 of the Income-tax Act, 2025 are the current provisions for Tax Year 2026-27 onward.

Subject	Income-tax Act, 1961	Income-tax Act, 2025
Tax where total income includes income on which no tax is payable	Section 110	Section 190
Tax on accumulated balance of recognised provident fund	Section 111	Section 191
Recognised provident fund conditions and tax computation	Part A of Fourth Schedule, especially rules 8 to 10	Part A of Schedule XI, especially paragraphs 8 to 10

Section 190: income included in total income on which no tax is payable

Section 190 of the Income-tax Act, 2025 carries forward the substance of former Section 110. It applies where an assessee's total income includes an amount on which no income-tax is payable under the Act.

In that situation, the assessee is entitled to a deduction from the income-tax otherwise chargeable on total income. The deduction is equal to the income-tax calculated at the average rate of income-tax on the amount on which no income-tax is payable.

In simple terms: the provision prevents an exempt or non-taxable component that is nevertheless included in total income from improperly increasing the effective tax burden. The statutory adjustment is made by applying the average rate of income-tax to that non-taxable amount and deducting the resulting amount from the tax otherwise chargeable.

Former Section 110 of the Income-tax Act, 1961

For periods governed by the 1961 Act, Section 110 provided the corresponding rule. Its basic mechanism was the same: where total income included income on which no income-tax was payable, a deduction from the tax chargeable on total income was allowed by reference to the average rate of income-tax.

Section 191: tax on accumulated balance of recognised provident fund

Section 191 of the Income-tax Act, 2025 deals with an accumulated balance due to an employee participating in a recognised provident fund when that balance is included in the employee's total income because the exclusion under paragraph 8 of Part A of Schedule XI is not available.

Where Section 191 applies, the Assessing Officer calculates the tax in accordance with paragraph 9 of Part A of Schedule XI. The computation looks back to the relevant years and determines the tax that would have been payable if the fund had not been a recognised provident fund. The excess over tax already paid for those years becomes payable in addition to other tax for the tax year in which the accumulated balance becomes payable.

When is the accumulated recognised provident fund balance excluded?

Paragraph 8 of Part A of Schedule XI provides important circumstances in which the accumulated balance is excluded from total income. These include continuous service of five years or more, certain terminations caused by ill-health or circumstances beyond the employee's control, qualifying transfers to another recognised provident fund after changing employment, and transfer of the entire balance to a notified pension scheme referred to in Section 124.

Where amounts have been transferred from recognised provident funds maintained by previous employers, the earlier qualifying service periods are also taken into account for the continuous-service test, subject to the statutory conditions.

How is tax calculated when the exclusion is not available?

Under paragraph 9 of Part A of Schedule XI, the Assessing Officer calculates the tax that would have been payable for each relevant year if the provident fund had not enjoyed recognised status. The amount by which that total exceeds the tax already paid by or on behalf of the employee for those years is payable by the employee, in addition to any other tax liability for the year in which the accumulated balance becomes payable.

Tax deduction when the accumulated balance is paid

Paragraph 10 of Part A of Schedule XI requires the trustees of a recognised provident fund, or another person authorised to make the payment, to deduct the amount payable under paragraph 9 when the accumulated balance is paid. The applicable tax-deduction provisions operate as if the accumulated balance were income chargeable under the head "Salaries".

Former Section 111 of the Income-tax Act, 1961

For periods governed by the Income-tax Act, 1961, Section 111 addressed tax on the accumulated balance of a recognised provident fund by reference to rule 8 and rule 9 of Part A of the Fourth Schedule. The 1961 Act text also contained an old sub-section concerning "super-tax" in a historical situation. The current Income-tax Act, 2025 uses the simplified Section 191 formulation and paragraph 9 of Part A of Schedule XI for the operative computation.

Which provision should a taxpayer use now?

For Tax Year 2026-27 and later tax years, refer to Sections 190 and 191 of the Income-tax Act, 2025 and the relevant provisions of Schedule XI. For income, returns, assessments, appeals or other proceedings relating to periods governed by the Income-tax Act, 1961, the former Sections 110 and 111 and the Fourth Schedule may continue to be relevant under the transition provisions.

Official references

For the current statutory text and transition guidance, use the official Income Tax Department resources:

This page is a general legal and tax information resource. Applicability can depend on the relevant tax year, facts and transition provisions.