16.   Annual accretion referred to in section 17(1)(i).–

(1) For the purposes of section 17(1)(i), annual accretion by way of interest, dividend or any other amount of similar nature during the tax year (herein referred to as the current tax year) to the balance of the credit of the fund or scheme referred to in section 17(1)(h), shall be the amount or aggregate of amounts computed in accordance with the following formula: —

TP = (PC/2) × R + (PC1 + TP1) × R

Where,–

TP = Taxable perquisite under section 17(1)(i) for the current tax year;

TP1 = aggregate of taxable perquisite under section 17(1)(i) for the tax year or years commencing on or after the 1^st April, 2020 other than the current tax year;

PC = aggregate amount of principal contribution made by the employer in excess of Rs. 750000 lakhs to the specified fund or scheme during the tax year;

PC1 = aggregate amount of principal contribution made by the employer in excess of Rs. 750000 to the specified fund or scheme for the tax year or years commencing on or after the 1^st April, 2020 other than the current tax year;

R = I/ F(avg.);

I = aggregate amount of income accrued during the current tax year in the specified fund or scheme account; F(avg.) = aggregate amount of balance to the credit of the specified fund or scheme on the first day of the current tax year plus the aggregate amount of balance to the credit of the specified fund or scheme on the last day of the current tax year, divided by two.

(2) For the purposes of this rule,–

a.  "specified fund or scheme" means a fund or scheme referred to in section 17(1)(h);

b. where the aggregate amount of TP1 and PC1 exceed the aggregate amount of balance to the credit of the specified fund or scheme on the first day of the current tax year, then the excess amount shall be ignored for the purpose of computing the aggregate amount of TP1 and PC1.