Superannuation proceeds in case of resignation

Superannuation proceeds in case of resignation

I have resined from a company and so I am getting superannuation proceeds from the same of approx 3 lakhs. I am only 35 years old. I have been advised by one person that I have to pay tax as per my tax slab.

Another person has advised me that I can save tax if I invest the proceeds of superannuation in a pension fund.

Please can you inform me what to do?

Asked 8 years ago in Income Tax

Dear Sir,

Superannuation is exempt upto a limit if received at the time of Retirement, Death, Physical incapacity. But in your case it will be taxable as you are receiving it upon resigning. Hence it will be taxable.

Yes, you can save taxes if you invest the proceeds in a pension fund but that also has a cap based on your Salary Structure etc. Plus the interest paid or the benefits derived from a Pension Fund is not upto the mark.

So it is advisable to consider the tax impact and then decide if you want to go for NPS or invest it elsewhere.

Trust this clarifies your query.

Feel free to get back/ call for any further clarifications.

Thanking You.

Regards,

CA Rohit R Sharma

BCOM, ACA, LLB - GEN, CERT. FAFP.

Rohit R Sharma

CA, Mumbai

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Dear Sir,

It will be subject to tax if you take it as income as per your slab rate but you if you invest it is superannuation pension fund scheme than the amount you will receive will be at the time of retirement age will be taxed and currently it will be tax free in your hand.

Vishrut Rajesh Shah

CA, Ahmedabad

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Dear Rohit Sir,

Thanks for your response. I have already recieved the proceeds from the superannuation totalling 6.20 lakhs. You are intimating I have to invest in a NPS scheme right? But the cap on that is only 50000/- per year. So balance will be taxable is it? Returns i know arent upto the mark but cant I invest in just a simple pension fund of LIC and save tax on the full amount this year?

Regards

Dear Rajesh Sir,

Thanks for your response. As mentioned above I have already recieved the proceeds. As such I cant invest in a superannuation pension fund but a normal LIC pension fund. Can I save tax if I do so too? Ready to pay tax when the annuity starts.

Regards.

Asked 8 years ago

No you need to pay tax as per our view.

Shyam Sunder Modani

CA, Hyderabad

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