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Query Answer
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Dear sir,

My client had been retired from 01.08.2017 and his company has tied up with icici prudence for superannuation fund. And icici prudence has tied up with LIC.

He has also received gratuity from company

Now my client has received 1/3 of fund from Icici prudence on 1.9.2017. And icici prudence has paid up 2/3 amount to LIC for annuity and now my client is receiving annuity amount month.

Kindly guide me on taxability of all transaction mentioned above and relief & deduction if any.

Reply

Sir,

As per section 10(13) of Income Tax Act, 1961, where an employee received payment from an approved superannuation fund on retirement the same is exempt from tax. Therefore commuted amount of superannuation fund received at the time of retirement is not taxable provided the said superannuation fund should be approved.

Whereas the monthly annuity amount is taxable under the head "income from other sources".

Exemption on gratuity amount (non-government employee)

where gratuity act is applicable on employer organization, least of the following is exempt from tax:

1) actual amount of gratuity received

2) fix amount of Rs. 20 lakh

3) Last salary (basic + D.A.)* number of years of employment *15/26 

(where gratuity act is not applicable on the organization method of calculation of exempt amount of gratuity is same as above except replace 15/30 instead of 15/26 in 3rd point)

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