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Taxability of money recd. from superannuation fund

Abhinav (student) (564 Points)

19 July 2013

I hav recently started articleship. A client has retired from an MNC. He has two form 16. One for the salary and the other for amount recd.from superannuation fund on which Tds is deducted. I am not able to crack their calculation with the tax slabs. If amount recd. from sup. fund is exempt why the company has deducted tax??

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3 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 20 July 2013

1) Calculate income tax only on the Salary received by the employee. The Superannuation Fund amount received is exempt, so show the same as exempt in the Income Tax Return

2) The client shall get the credit of the Tax deducted by the employer on the payment of superannuation Fund

3) Here in the above case, there was no need to deduct TDS on payment of Superannuation Fund in the event of retirement of the employee (ie. your client).

4) Your client will get back the amount of TDS deducted as Income Tax Refund.

Note :

1) TDS is deducted on payment of Superannuation Fund, if the employee resigns, discharges or is dismissed.

2) Whereas the payment of Superannuation Fund in the event if death of employee / beneficiary or at the time of retirement shall be exempt u/s 10(13) of the Income Tax Act, 1961.

Regards,

Devendra Kulkarni

Abhinav (student) (564 Points)
Replied 21 July 2013

Client has retired from the company The company has deducted tax in the following manner. 1/3 rd exempt Tax deducted on the balance at the average rate of last three years at which the employee was taxed in accordance with Part B of fourth schedule of the act. I have calculated tax taking the 2/3rd (as shown in form 16) amount as his income. Tax payable 90000