Tax Treatment of Approved Superannuation Fund

Tax treatment of approved superannuation fund

Superannuation fund is any fund which is approved by the commissioner in accordance with the rules contained in Part 2 of Sixth Schedule [Section 2(4)].

The tax treatment of any contribution to or any payment from the fund is as under:

 Employer’s contribution is exempted from tax.

 Interest on accumulated balance is exempted from tax.

 Clause (25), Part 1 of Second Schedule grants exemption in respect of:

Any payment from superannuation fund made on the death of a beneficiary or in commutation of any annuity or in lieu or by refund of contribution on the death of a beneficiary:

i. in case of a government employee or a local authority or a statutory body or corporation established by any law for the time being in force, the amount receivable in accordance with the rules and conditions of his service;

ii. any amount receivable from any gratuity fund in approved by the Commissioner in accordance with the rules contained in Part 3 of the Sixth Schedule;

iii. in the case of any other employee, the amount not exceeding two hundred thousand rupees receivable under any scheme applicable to all employees of the employer and approved by the Central Board of Revenue for the purpose of this sub-clause; and

iv. in the case of any employee to whom sub-clause (i), (ii) and (iii) do not apply, fifty percent of the amount receivable or seventy-five thousand rupees, whichever is the less.