LIC Superannuation -Tax Exemption
This query is : Resolved
19 August 2024
Sir/Madam
Withdrawing my superannuation money from LIC
My Date of Birth 03/11/1965/59 Year
I have been working with this employer since 2011 (13 years+)
Given to understand that LIC Superannuation withdrawals are exempted from tax subject to the employee served the employer for more than 5 continuous years. I want to know under which Section of Income Tax Rules this tax is exempted to inform the LIC Superannuation Team to not to deduct tax TDS and inform my employer to not to deduct tax at my current slab rate which is 30%. Please help me to avail eligible tax exemption on this LIC Super annuation.
Withdrawing my superannuation money from LIC
My Date of Birth 03/11/1965/59 Year
I have been working with this employer since 2011 (13 years+)
Given to understand that LIC Superannuation withdrawals are exempted from tax subject to the employee served the employer for more than 5 continuous years. I want to know under which Section of Income Tax Rules this tax is exempted to inform the LIC Superannuation Team to not to deduct tax TDS and inform my employer to not to deduct tax at my current slab rate which is 30%. Please help me to avail eligible tax exemption on this LIC Super annuation.
12 August 2025
1. What is LIC Superannuation?
LIC Superannuation is a retirement benefit fund.
Contributions are made by the employer (and sometimes the employee).
The accumulated amount is paid on retirement or resignation.
2. Tax Treatment of Superannuation Fund Withdrawals
Under the Income Tax Act:
Amounts received from a Recognized Provident Fund or Superannuation Fund on retirement or after continuous service of 5 years or more are generally exempt from tax.
3. Relevant Sections of the Income Tax Act
Section 10(13): Exemption of retirement benefits received from Recognized Provident Funds or Superannuation Funds.
Rule 2BB of Income Tax Rules, 1962: Provides detailed exemption conditions for amounts received from recognized superannuation funds.
Section 194A(3)(iii): Exemption from TDS on superannuation fund withdrawals where conditions are met.
4. Key Condition for Tax Exemption
The employee must have served the employer for at least 5 continuous years.
Withdrawal after completing 5 years of continuous service is fully exempt from tax.
If service is less than 5 years, the amount becomes taxable as salary income.
5. What to Inform LIC and Employer?
You can provide them with:
A declaration stating that you have completed more than 5 continuous years of service.
Request for no TDS deduction under Section 194A(3)(iii).
You can also provide a certificate of continuous service if required.
6. Summary
Condition Tax Treatment
Service ≥ 5 continuous years Withdrawal exempt under Section 10(13) & Rule 2BB
Service < 5 years Withdrawal taxable as salary income
TDS on withdrawal No TDS if exemption conditions met (Sec 194A(3)(iii))
LIC Superannuation is a retirement benefit fund.
Contributions are made by the employer (and sometimes the employee).
The accumulated amount is paid on retirement or resignation.
2. Tax Treatment of Superannuation Fund Withdrawals
Under the Income Tax Act:
Amounts received from a Recognized Provident Fund or Superannuation Fund on retirement or after continuous service of 5 years or more are generally exempt from tax.
3. Relevant Sections of the Income Tax Act
Section 10(13): Exemption of retirement benefits received from Recognized Provident Funds or Superannuation Funds.
Rule 2BB of Income Tax Rules, 1962: Provides detailed exemption conditions for amounts received from recognized superannuation funds.
Section 194A(3)(iii): Exemption from TDS on superannuation fund withdrawals where conditions are met.
4. Key Condition for Tax Exemption
The employee must have served the employer for at least 5 continuous years.
Withdrawal after completing 5 years of continuous service is fully exempt from tax.
If service is less than 5 years, the amount becomes taxable as salary income.
5. What to Inform LIC and Employer?
You can provide them with:
A declaration stating that you have completed more than 5 continuous years of service.
Request for no TDS deduction under Section 194A(3)(iii).
You can also provide a certificate of continuous service if required.
6. Summary
Condition Tax Treatment
Service ≥ 5 continuous years Withdrawal exempt under Section 10(13) & Rule 2BB
Service < 5 years Withdrawal taxable as salary income
TDS on withdrawal No TDS if exemption conditions met (Sec 194A(3)(iii))
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