Superannuation

This query is : Resolved

Sachin Kumar (Querist)
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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..?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 August 2018 Tax free if a single payment, but periodical annuity through LIC is taxable.

Sachin Kumar

Sachin Kumar (Querist)
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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...?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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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:

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### 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.

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### 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.

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### 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**.

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### 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**.

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### 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.

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### 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 |

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### 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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