Superannnuation contribution query

Rule 87 of the Income Tax Rules  states that the ordinary annual contribution by the employer to a fund in respect of any particular employee shall not exceed [twenty-seven] per cent of his salary for each year as reduced by the employer's contribution, if any, to any provident fund (whether recognised or not) in respect of the same employee for that year in order that the same is not treated as a perquisite u/s.17(2)(v).

An Employer can contribute 12% (max) to EPF

Balance 15% (max) [27% (-) 12% ] is available to the employer for contribution to superannuation fund.

In your case the employer has contributed 15% to superannuation Fund and (assuming) 12% to EPF, thereby totaling to 27% which is within the limit prescribed u/r 87 (supra). Hence no tax liability at all.

The maximum non-taxable contribution to superannuation fund of Rs. 1.00 lac was in regards to Fringe Benefit Tax. With the abolition of FBT there is no such limit of Rs.1.00 lac.

In view of the above, I am therefore of the view that as long as the employer’s contribution to Superannuation Fund is below 15% of the salary (basic + DA) the same is not taxable provided its total contribution to all funds is 27% or below.

hey

your view is correct!!

If employer has calulated other way around so you should ask for that money also!!

Thanks!!

Originally posted by : Rachit
	Rule 87 of the Income Tax Rules  states that the ordinary annual contribution by the employer to a fund in respect of any particular employee shall not exceed [twenty-seven] per cent of his salary for each year as reduced by the employer's contribution, if any, to any provident fund (whether recognised or not) in respect of the same employee for that year in order that the same is not treated as a perquisite u/s.17(2)(v). An Employer can contribute 12% (max) to EPF Balance 15% (max) [27% (-) 12% ] is available to the employer for contribution to superannuation fund. In your case the employer has contributed 15% to superannuation Fund and (assuming) 12% to EPF, thereby totaling to 27% which is within the limit prescribed u/r 87 (supra). Hence no tax liability at all. The maximum non-taxable contribution to superannuation fund of Rs. 1.00 lac was in regards to Fringe Benefit Tax. With the abolition of FBT there is no such limit of Rs.1.00 lac. In view of the above, I am therefore of the view that as long as the employer’s contribution to Superannuation Fund is below 15% of the salary (basic + DA) the same is not taxable provided its total contribution to all funds is 27% or below.

Hi Rachit, Thanks for your response. do you mean that now whole 15% of the contribution (in my case 1,80,000 per annum) can be put in superannuation as the non-taxable amount?. when was the FBT abolished. Because, my organization still says that those who have opted for SA fund, will only get 100,000 in SA and balance will be paid as taxable amount. I am getting the balance as taxable. My only question was that this year, I could have got full 100,000 in SA amount (by a contribution of 15,000 for 7 months), but now only around 50,000 will be paid.

Can you refer to some rules which says that there is no such limit for non-taxable SA of 100,000.

FBT was in force from Assessment Year 2006-07 to Asst. Yr. 2009-10.It was abolished from 01.04.2010.(sec.115WM).

Refer Rule 87 of the Income Tax Rules as mentioned in my earlier quote.

In regards your query about SA non-taxable limit of Rs.1.00 lac, I would prefer to ask you a rhetorical question :

Can you refer the relevant I. Tax provisions/ rules applicable for the Asst. Yr in question, which says that employer's contriibution to superannuation fund is not taxable upto Rs. 1.00.lac ???

With regard to Employers  Contribution towards SABF  up to Rs. one lakh is exempted and not taxable under perks u/s. 17 (1) from the Assessment Year 2010-11.  From the Assessment Year 2017-18 it has been invreased to Rs. one laks fifty thousand.