Payment from an approved Superannuation Fund - Section 10(13) - Income Tax - Ready Reckoner - Income Tax

Section 10(13) - Payment from an approved Superannuation Fund Any payment from an approved superannuation fund shall be exempt provided it is made - on death of a beneficiary to any employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement by way of refund of contribution to on the death of beneficiary by way of refund of contribution to an employee on his leaving the service in connection with which the funds is established otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement, to the extent to which such payment does not exceed the contributions made prior to the commencement of this Act and any interest thereon by way of transfer to the account of the employee under a pension scheme referred u/s 80CCD and notified by the central government. Tax Treatment : The tax treatment as regards the contribution to and payment form the fund is as under : Employee's Contribution : Deduction is available u/ 80C from gross total income. Employer's contribution :[ Sec 17(2)(vii) applicable upto A.Y. 2020-21] : Contribution by the employer to the approved superannuation fund is exempt upto Rs. 1,50,000 per year per employee. if contribution exceeds Rs. 1,50,000 shall be taxable in hands of employee. Interest on accumulated balance : It is exempt from tax. NOTES:- For tax purpose there are 2 types of superannuation fund. One is approved superannuation and another is not approved The approved fund means a fund, which is approved and continues to be approved by the commissioner of Income Tax in accordance with the Rules set out in Part-B of Fourth Schedule of Income Tax Act . This provision however, does not cover commutation of an annuity paid on voluntary retirement of the employee.