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Anil

Anil Rego  |388 Answers  |Ask -

Financial Planner - Answered on Aug 26, 2022

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more
Bipin Question by Bipin on Aug 26, 2022Hindi
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I have query on Superannuation. As I am looking completing 15 years of service and if I resign now following queries are coming to my mind:

a) Is Superannuation exempted from Tax? If yes, what is the limit?

b) What is procedure of Transferring Superannuation to next company?

In the same way, please confirm on the gratuity component.

Ans:

a) Superannuation taxability is based on certain criteria:

  1. If you are withdrawing the superannuation amount while leaving the company, the entire amount will be subjected to tax. This will be accounted as income from other sources, added the income and taxed as per your tax slab
  2. If payment is made to the employee as an annuity after the retirement: 1/3rd of amount will be tax free and the remaining annuity will be taxed as per your tax slab at retirement
  3. It is not taxable if payment is made to the employee who is incapacitated by a disability or illness, or other reasons or payments made after death of employees to legal heirs

If both the parties (old and new employer) agree, then you can transfer the amount to new employer, provided the new company has an approved superannuation fund. If not, you can continue keeping the money in the existing superannuation account.

b) Gratuity is exempt from tax on the least of the following:

  1. Up to 20 lakh currently: Last salary (basic + DA)* number of years of employment* 15/26
  2. Actual Gratuity received
  3. For government employees, gratuity is fully exempt from tax.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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