Superannuation
This query is : Resolved
11 August 2018
Salaried person(Age-41) had received Rs. 1,11, 964 (superannuation from LIC)
on 01-09-2017 from previous employer where she had done job till 2012.
Please tell taxability of amount received for A.Y. 2018-19..?
on 01-09-2017 from previous employer where she had done job till 2012.
Please tell taxability of amount received for A.Y. 2018-19..?
11 August 2018
Tax free if a single payment, but periodical annuity through LIC is taxable.
11 August 2018
sir, under section 10(13) there are exceptions over payment of superannuation amount. But she is not falling in any of exception. I am not able to understand the concept of annuation. Can you guide me in short..?
Any amount received before retirement should be taxable...?
26 July 2025
Here's a clear explanation regarding the **taxability of superannuation payments**, including the concept of **annuities**, and how Section 10(13) applies:
---
### 1. **Superannuation Lump Sum Payment**
* Under **Section 10(13)** of the Income Tax Act, any **lump sum payment** received from a recognized superannuation fund on **retirement, resignation, or death** is **exempt from tax**, subject to certain limits.
* The exemption generally applies when the payment is **received as a lump sum** upon retirement or cessation of service.
---
### 2. **Exceptions to Exemption**
* The exemption does **not apply** if the amount is received:
* Before retirement or resignation,
* As part of **periodical payments or annuities**,
* Or if the employee has not completed the prescribed minimum years of service.
---
### 3. **What is Annuity in this Context?**
* **Annuity** means periodic payments (monthly, quarterly, annually) paid by the LIC or the superannuation fund to the employee after retirement.
* Such **periodical annuity payments are taxable as salary or income from other sources**, depending on the nature of the payment.
* The **lump sum** paid on retirement or cessation (under certain conditions) is exempt, but any **periodic annuity payments after that are taxable**.
---
### 4. **Taxability for Your Case**
* Since the person **received Rs. 1,11,964 in one lump sum in 2017**, but she **left the job in 2012**, the exemption under Section 10(13) **may not fully apply** because the payment was received **after a gap** and not immediately on retirement.
* If the payment was a **final settlement lump sum** from a recognized superannuation fund, it may still be exempt.
* However, if this payment is a **periodical annuity payment (like monthly pension)** or is a **deferred amount**, it is **taxable**.
---
### 5. **Short Explanation of Annuity**
* **Annuity = Regular payments over time** (like pension).
* **Lump sum = One-time payment**.
* Only lump sum at retirement or cessation under certain conditions is exempt.
* Periodic annuities/pensions are taxable.
---
### 6. **Summary**
| Payment Type | Taxability |
| ----------------------------------------------------- | -------------------------------------- |
| Lump sum on retirement/resignation (Section 10(13)) | Generally exempt subject to conditions |
| Lump sum received after long gap or before retirement | Taxable, unless specifically exempted |
| Periodic annuity/pension payments from super fund | Taxable as income |
---
### Suggestion:
* Verify if the superannuation payment is a **final lump sum** or part of **periodical annuity**.
* Check whether the superannuation fund is a **recognized fund**.
* If it’s a lump sum after resignation with gap, taxability arises.
* If it’s annuity, include it as income in your return.
If you want, I can help you prepare the tax treatment or draft a return based on this info!
---
### 1. **Superannuation Lump Sum Payment**
* Under **Section 10(13)** of the Income Tax Act, any **lump sum payment** received from a recognized superannuation fund on **retirement, resignation, or death** is **exempt from tax**, subject to certain limits.
* The exemption generally applies when the payment is **received as a lump sum** upon retirement or cessation of service.
---
### 2. **Exceptions to Exemption**
* The exemption does **not apply** if the amount is received:
* Before retirement or resignation,
* As part of **periodical payments or annuities**,
* Or if the employee has not completed the prescribed minimum years of service.
---
### 3. **What is Annuity in this Context?**
* **Annuity** means periodic payments (monthly, quarterly, annually) paid by the LIC or the superannuation fund to the employee after retirement.
* Such **periodical annuity payments are taxable as salary or income from other sources**, depending on the nature of the payment.
* The **lump sum** paid on retirement or cessation (under certain conditions) is exempt, but any **periodic annuity payments after that are taxable**.
---
### 4. **Taxability for Your Case**
* Since the person **received Rs. 1,11,964 in one lump sum in 2017**, but she **left the job in 2012**, the exemption under Section 10(13) **may not fully apply** because the payment was received **after a gap** and not immediately on retirement.
* If the payment was a **final settlement lump sum** from a recognized superannuation fund, it may still be exempt.
* However, if this payment is a **periodical annuity payment (like monthly pension)** or is a **deferred amount**, it is **taxable**.
---
### 5. **Short Explanation of Annuity**
* **Annuity = Regular payments over time** (like pension).
* **Lump sum = One-time payment**.
* Only lump sum at retirement or cessation under certain conditions is exempt.
* Periodic annuities/pensions are taxable.
---
### 6. **Summary**
| Payment Type | Taxability |
| ----------------------------------------------------- | -------------------------------------- |
| Lump sum on retirement/resignation (Section 10(13)) | Generally exempt subject to conditions |
| Lump sum received after long gap or before retirement | Taxable, unless specifically exempted |
| Periodic annuity/pension payments from super fund | Taxable as income |
---
### Suggestion:
* Verify if the superannuation payment is a **final lump sum** or part of **periodical annuity**.
* Check whether the superannuation fund is a **recognized fund**.
* If it’s a lump sum after resignation with gap, taxability arises.
* If it’s annuity, include it as income in your return.
If you want, I can help you prepare the tax treatment or draft a return based on this info!
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