The provisions relating to the approved Superannuation Scheme are set out in Part 'B' of the Fourth Scheme of the Income-Tax Act, 1961 and Part XIII of the Income Tax Rules , 1962. The income tax concession will be available only if the scheme is approved by the CIT.

1. The annual contribution is treated as a deductible business expense in term of Section 36(1) (iv) of the I.T. Act.
2. In terms of a Notification issued by the Central Board of Direct Taxes .80% of the contribution (s) towards the past service liability are treated as deductible business expenses spread over in the subsequent years of payment.
3. The employee's contribution , in the case of the Contributions scheme qualifies for exemption under Section 88 of the Income-Tax Act.
4. In terms of section 17(2)(vi) , the contributions paid by the employer are not treated as perquisites in the hands of the employee concerned.
5. In terms of Section 19(25)(iii) of the Income-Tax Act, the interest on the fund is exempt from tax.
6. In terms of Section 10(13) of the Income-Tax Act, the benefits payable on death are exempt from tax.
7. In terms of Section 10(10A)(ii) of the Act, the admissible commuted value on retirement is tax-free.

HOW IS THE SCHEME INSTALLED ?
The employer is required to take the following steps to install the Scheme :

1. Appoint Trustees (minimum 2) for administering the Scheme, draft the Trust deed and Rules in consultation with L.I.C. and execute the trust Deed to establish an irrevocable Trust.
2. Get the resolution passed by the Board of the Company for opting for the L.I.C. Group Superannuation Scheme.
3. Make an application to C.I.T. for approval under Part 'B' of the Fourth Schedule the Income-Tax Act, 1961.
4. Forward to L.I.C., the Master proposal Form duly signed by the Trustees, Employees data, satisfactory evidence of age of each employee, copies of Trust Deed and Rules and cheque towards payment of contribution.
5. Trustees to open Bank account in name of the Trust and future contributions to be routed through trust.