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.
- The annual contribution is treated
as a deductible business expense in
term of Section 36(1) (iv) of the I.T.
- 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.
- The employee's contribution , in
the case of the Contributions scheme
qualifies for exemption under Section
88 of the Income-Tax Act.
- 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.
- In terms of Section 19(25)(iii) of
the Income-Tax Act, the interest on
the fund is exempt from tax.
- In terms of Section 10(13) of the
Income-Tax Act, the benefits payable
on death are exempt from tax.
- In terms of Section 10(10A)(ii) of
the Act, the admissible commuted value
on retirement is tax-free.
The employer is required to take the following
steps to install the Scheme :
- 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.
- Get the resolution passed by the
Board of the Company for opting for
the L.I.C. Group Superannuation Scheme.
- Make an application to C.I.T. for
approval under Part 'B' of the Fourth
Schedule the Income-Tax Act, 1961.
- 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
- Trustees to open Bank account in
name of the Trust and future contributions
to be routed through trust.